FREE CALCULATOR · MONEY
Find out how much interest you'd save — and how many months you'd shave off — by paying a little extra on your loan each month.
Enter your loan, then drag the extra-payment slider to watch the savings change.
A standard loan payment is split: part covers that month's interest, the rest reduces the balance. When you pay extra, the full extra amount skips the interest line and attacks the balance directly. A smaller balance means less interest next month — and that effect compounds for the rest of the loan.
There is no single closed-form formula for the savings, because every extra payment changes the balance for all the months after it. The calculator simulates the amortization schedule month by month — the same way your lender's system does — and compares the result with the plain minimum-payment schedule.
A $25,000 car loan at 6.5% APR over 5 years has a $489.15 minimum payment and $4,349.22 of total interest. Add $100 extra each month: the loan is paid off in 49 months instead of 60 — 11 months early — and the total interest drops to $3,483.78. You keep $865.44.
Interest each month is charged on the balance you still owe. An extra payment reduces that balance, so every later month accrues a little less interest. Those monthly savings add up over the whole loan — and the loan ends sooner, which cuts off interest entirely for the months you skip.
Tell your lender or servicer the extra amount is a "principal-only" payment. Some servicers default to treating extra money as an early next payment, which does almost nothing to cut your interest. Check your statement after the first extra payment to confirm the balance dropped by the full amount.
Some loans carry a prepayment penalty, and some auto loans use precomputed interest, where paying early doesn't reduce the total interest at all. Read your loan documents or ask your lender before committing to extra payments.
Paying extra earns you a guaranteed return equal to your loan's interest rate — paying down a 7% loan is like earning a risk-free 7%. Investing might earn more over time but carries no guarantee. Many people split the difference: extra payments on high-rate debt, investing for the rest.
Yes, especially on long loans. Rounding a $489 payment up to $500 is only $11 extra a month, but on a 5-year loan that small nudge still shaves months off and saves real interest. Try your rounded amount in the calculator above.
Usually not. Extra payments shorten the loan's remaining life; the scheduled minimum payment stays the same unless you refinance or your lender recasts the loan. Budget for the full minimum payment regardless.
As a rule of thumb, extra dollars save the most interest on the loan with the highest rate. Paying down a 19% credit card balance saves far more than the same extra amount on a 6% car loan.