Making extra payments on your loan can significantly impact the total interest paid and the time it takes to become debt-free. This calculator helps you visualize the benefits of adding even a small amount to your regular monthly payments.
How it Works: The Math Behind the Savings
The core of loan repayment involves calculating the monthly payment based on the principal amount, interest rate, and loan term. When you make extra payments, you're essentially paying down the principal faster. This reduces the balance on which future interest is calculated, leading to substantial savings over the life of the loan.
Standard Monthly Payment (M): P [ r(1 + r)^n ] / [ (1 + r)^n – 1]
Where P = Principal Loan Amount
Total Interest Paid (Original): (M * n) – P
When extra payments are made, the loan balance is reduced more quickly. The calculator simulates this by recalculating the loan amortization schedule with the increased payment amount. It determines how many months it takes to pay off the loan with the higher payment and then compares the total interest paid and the total time to the original loan terms.
Benefits of Making Extra Payments:
Reduced Total Interest Paid: The most significant benefit. By paying down principal faster, you pay less interest over time.
Shorter Loan Term: You can pay off your loan years earlier, freeing up cash flow sooner.
Financial Freedom: Becoming debt-free faster provides peace of mind and opens up opportunities for other financial goals.
Building Equity Faster: For mortgages, this means building equity in your home more rapidly.
When to Use This Calculator:
Planning to pay off a mortgage early.
Looking to accelerate repayment of a car loan or personal loan.
Evaluating the impact of a windfall or bonus on your existing debts.
Budgeting and financial planning to understand debt reduction strategies.
Even small, consistent extra payments can make a big difference. Use this calculator to see how much you could save and how much faster you could achieve your financial goals.
function calculateLoan() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var termYears = parseFloat(document.getElementById("loanTermYears").value);
var extraPayment = parseFloat(document.getElementById("extraPayment").value);
var resultDiv = document.getElementById("result");
var originalTermSpan = document.getElementById("originalTerm");
var newTermSpan = document.getElementById("newTerm");
var originalInterestSpan = document.getElementById("originalInterest");
var newInterestSpan = document.getElementById("newInterest");
var totalSavingsSpan = document.getElementById("totalSavings");
var timeSavedSpan = document.getElementById("timeSaved");
// Clear previous results
originalTermSpan.textContent = "–";
newTermSpan.textContent = "–";
originalInterestSpan.textContent = "$–";
newInterestSpan.textContent = "$–";
totalSavingsSpan.textContent = "$–";
timeSavedSpan.textContent = "–";
// Input validation
if (isNaN(principal) || principal <= 0 ||
isNaN(annualRate) || annualRate < 0 ||
isNaN(termYears) || termYears <= 0 ||
isNaN(extraPayment) || extraPayment < 0) {
resultDiv.innerHTML = "
Error
Please enter valid positive numbers for all fields.";
return;
}
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termYears * 12;
// Calculate original monthly payment
var originalMonthlyPayment;
if (monthlyRate === 0) {
originalMonthlyPayment = principal / numberOfPayments;
} else {
originalMonthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Calculate original total interest
var originalTotalInterest = (originalMonthlyPayment * numberOfPayments) – principal;
// Calculate new total payment with extra payment
var totalMonthlyPayment = originalMonthlyPayment + extraPayment;
// Calculate new loan term and interest with extra payments
var remainingBalance = principal;
var months = 0;
var newTotalInterest = 0;
if (totalMonthlyPayment 0) {
resultDiv.innerHTML = "
Warning
Your extra payment is too small to significantly impact the loan term. Please consider a larger extra payment.";
return;
}
while (remainingBalance > 0) {
months++;
var interestForMonth = remainingBalance * monthlyRate;
var principalForMonth = totalMonthlyPayment – interestForMonth;
// Ensure principal payment doesn't exceed remaining balance
if (principalForMonth > remainingBalance) {
principalForMonth = remainingBalance;
totalMonthlyPayment = interestForMonth + principalForMonth; // Adjust final payment
}
remainingBalance -= principalForMonth;
newTotalInterest += interestForMonth;
if (months > numberOfPayments * 5) { // Safety break for extremely long terms or edge cases
resultDiv.innerHTML = "
Calculation Error
Could not determine a payoff time within a reasonable range. Please check your inputs.";
return;
}
}
var newTermYears = months / 12;
var totalSavings = originalTotalInterest – newTotalInterest;
var originalTermMonths = termYears * 12;
var timeSavedMonths = originalTermMonths – months;
var timeSavedYears = Math.floor(timeSavedMonths / 12);
var timeSavedMonthsRemainder = timeSavedMonths % 12;
originalTermSpan.textContent = termYears.toFixed(2);
newTermSpan.textContent = newTermYears.toFixed(2);
originalInterestSpan.textContent = "$" + originalTotalInterest.toFixed(2);
newInterestSpan.textContent = "$" + newTotalInterest.toFixed(2);
totalSavingsSpan.textContent = "$" + totalSavings.toFixed(2);
if (timeSavedYears > 0 || timeSavedMonthsRemainder > 0) {
timeSavedSpan.textContent = timeSavedYears + " years and " + timeSavedMonthsRemainder + " months";
} else {
timeSavedSpan.textContent = "0 years and 0 months";
}
// Add a class to highlight the savings
totalSavingsSpan.classList.add("highlight");
newInterestSpan.classList.add("highlight");
newTermSpan.classList.add("highlight");
timeSavedSpan.classList.add("highlight");
}