What an extra loan payment actually saves
One extra payment does not just shorten the calendar. It cuts the interest that would have been charged on the remaining principal. Here is how to see the difference before you send the money.
Interest is charged on what is still owed
Amortized loans (mortgages, auto loans, personal loans) apply most of the early payment to interest. Extra principal reduces the balance immediately, so later interest is calculated on a smaller number. That is why $100 extra this month can save more than $100 of interest over the life of the loan.
Compare extra payment vs extra term
Two common tactics: a fixed extra amount each month, or one extra full payment per year. Both work. The monthly extra usually wins on total interest because the balance falls sooner. A shorter term (for example 15 vs 30 years) raises the required payment; extra principal keeps the required payment the same and is optional if cash is tight.
Confirm there is no prepayment penalty and that extra amounts are applied to principal, not held as a prepaid installment.
Run your own amortization
Use the mortgage and loan calculators on Qalculators with and without an extra payment field. Look at total interest and payoff date, not only the new monthly number. If you also have high-interest consumer debt, compare that rate to the loan rate before you decide where the extra cash goes.
What an extra loan payment actually saves is part of the Finance cluster on Qalculators. Use the related tools below to run the numbers instead of estimating by hand.
Results depend on the values you enter. Treat them as planning estimates and confirm important decisions with a professional when needed.