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 extra amounts to your regular loan payments. It's a powerful tool for anyone looking to accelerate their loan repayment and save money over time.
How It Works: The Math Behind the Savings
The calculator first determines your standard monthly payment using the loan principal, annual interest rate, and loan term. It then calculates the total interest and repayment period for the loan without any extra payments. Subsequently, it recalculates the loan amortization schedule with the added extra monthly payment. By comparing the two scenarios, it quantifies the total interest saved and the reduction in loan term.
Standard Monthly Payment Calculation: This uses the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
Amortization with Extra Payments: For each month, the total payment (standard payment + extra payment) is applied. The interest is calculated on the remaining principal, and the rest of the payment reduces the principal. This accelerated principal reduction means less interest accrues in future months.
Calculating Savings: The calculator compares the total interest paid in the standard scenario versus the scenario with extra payments. The difference is the total interest saved. The reduction in the number of payments needed to reach a zero balance represents the time saved.
When to Use This Calculator:
This calculator is ideal for:
Borrowers with mortgages looking to pay them off faster.
Individuals with auto loans who want to save on interest.
Anyone with a personal loan who wishes to reduce their debt burden sooner.
By understanding the potential savings, you can make informed decisions about your financial goals and debt management. Even small, consistent extra payments can lead to substantial long-term benefits.
function calculateLoanExtraPayment() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var years = parseFloat(document.getElementById("loanTermYears").value);
var extraPayment = parseFloat(document.getElementById("extraPaymentAmount").value);
var resultDiv = document.getElementById("result");
var totalInterestSavedDisplay = document.getElementById("totalInterestSaved");
var timeSavedDisplay = document.getElementById("timeSaved");
if (isNaN(principal) || principal <= 0 ||
isNaN(annualRate) || annualRate < 0 ||
isNaN(years) || years <= 0 ||
isNaN(extraPayment) || extraPayment 0) {
standardMonthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else { // Handle 0% interest rate
standardMonthlyPayment = principal / numberOfPayments;
}
var totalInterestStandard = (standardMonthlyPayment * numberOfPayments) – principal;
var totalPaymentsStandard = numberOfPayments;
// — Calculate Payments and Interest with Extra Payment —
var currentPrincipal = principal;
var totalPaidWithExtra = 0;
var numberOfPaymentsWithExtra = 0;
var totalInterestWithExtra = 0;
while (currentPrincipal > 0) {
var interestPayment = currentPrincipal * monthlyRate;
var principalPayment = (standardMonthlyPayment + extraPayment) – interestPayment;
// Ensure we don't overpay and principal doesn't go negative
if (principalPayment > currentPrincipal) {
principalPayment = currentPrincipal;
interestPayment = 0; // For the very last payment, interest is essentially zeroed out by overpayment
}
currentPrincipal -= principalPayment;
totalPaidWithExtra += (standardMonthlyPayment + extraPayment);
totalInterestWithExtra += interestPayment;
numberOfPaymentsWithExtra++;
// Prevent infinite loops in edge cases, though unlikely with proper inputs
if (numberOfPaymentsWithExtra > (years * 12 * 5) ) { // Arbitrary large number, e.g. 5x original term
alert("Calculation exceeded expected number of payments. Check input values.");
resultDiv.style.display = 'none';
return;
}
// Adjust for floating point inaccuracies on the last payment
if (currentPrincipal -0.01) {
currentPrincipal = 0;
}
}
// Ensure total interest doesn't become negative due to calculation nuances with extra payment
if (totalInterestWithExtra < 0) totalInterestWithExtra = 0;
var interestSaved = totalInterestStandard – totalInterestWithExtra;
if (interestSaved < 0) interestSaved = 0; // Cannot save negative interest
var monthsSaved = totalPaymentsStandard – numberOfPaymentsWithExtra;
var yearsSaved = Math.floor(monthsSaved / 12);
var remainingMonthsSaved = monthsSaved % 12;
totalInterestSavedDisplay.textContent = "$" + interestSaved.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
timeSavedDisplay.textContent = yearsSaved + " Years and " + remainingMonthsSaved + " Months";
resultDiv.style.display = 'block';
}