The maths, with your numbers
What paying extra would do
Every dollar above the payment comes straight off the balance, so the interest stops being charged on it. These are worked out from the loan above.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
A longer term lowers the payment and raises the interest. Your loan is highlighted.
Amortization schedule
Where each payment goes, from the first to the last.
This is the calculator for the question “how long until this is gone?”. Put in what you owe, the rate and what you pay, and it works out the number of payments, the date and the interest left to come.
Why the answer is rarely the term on the paperwork
A loan's stated term assumes you pay exactly the scheduled amount, every month, for the whole term. Anything extra changes the date, and the effect is larger than people expect because each extra dollar removes interest for every month that follows. Switch to “the payment” mode above and add an extra amount to see it.
When a payment is too small
If the payment is smaller than the interest each month, the balance never falls. That is negative amortization, and the calculator says so rather than producing a nonsense date. Credit cards can behave this way at the minimum payment, which is why we built a separate calculator for them.
Make sure the extra goes to principal
Paying more only shortens the loan if the servicer applies the extra to the balance. By default, payments go to fees first, then interest, then principal, and an unexplained overpayment can simply be treated as next month's payment arriving early. Tell them in writing to apply it to principal.
Quick answers
How long will it take to pay off my loan?
Enter the balance, the rate and what you pay each month above. The calculator gives the number of payments and the date, and warns you if the payment is too small to clear it.
Does paying extra shorten a loan?
Yes, and by more than the extra itself, because the interest on every later month falls too. Tell the servicer to apply it to principal.
Why does my balance barely move?
Early payments are mostly interest, because interest is charged on the balance. The schedule above shows exactly where each payment goes.
What if my payment does not cover the interest?
The balance grows instead of falling. That is negative amortization, and the calculator says so rather than giving a payoff date.
Sources
- CFPB, how payments are applied and how to direct extra to principal
- CFPB, negative amortization
- CFPB, prepayment penalties