Loan Repayment Calculator
Print| Total Cumulative Interest | $0.00 |
The Loan Repayment Calculator helps borrowers evaluate loan payoff timelines, complete repayment schedules, total interest charges, and the financial impact of extra monthly principal payments across personal, auto, student, and mortgage loans.
The Loan Repayment Formula
The standard monthly installment payment for a fully amortized loan repayment schedule is derived using the following formula:
Monthly Repayment (PMT) = Principal × [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]
When extra monthly payments (E) are added directly to principal, the revised payoff term (in months) is computed as:
New Term (Months) = -ln( 1 - (r × Principal) / (PMT + E) ) / ln( 1 + r )
Where:
- Principal: Outstanding loan balance owed to the lender.
- r (Monthly Rate): Annual interest rate (APR) divided by 12 months.
- PMT: Standard scheduled monthly repayment payment.
- E: Additional monthly principal payment contribution.
Impact of Extra Monthly Repayments
Compare time and interest savings when adding extra monthly principal payments to a $100,000 loan at 7.00% APR (20-year baseline):
| Extra Monthly Payment | Total Monthly Payment | New Payoff Term | Time Saved | Total Interest Savings |
|---|---|---|---|---|
| $0 (Baseline) | $775.30 | 20 Years (240 mos) | 0 Months | $0.00 |
| +$100 / Month | $875.30 | 15.8 Years (190 mos) | 4 Years 2 Months | $19,765.40 |
| +$200 / Month | $975.30 | 13.1 Years (157 mos) | 6 Years 11 Months | $33,050.10 |
| +$300 / Month | $1,075.30 | 11.2 Years (134 mos) | 8 Years 10 Months | $42,185.80 |
Step-by-Step Loan Repayment Calculation Example
Here is an example calculating total repayment and interest savings for a $25,000 personal loan at 8.00% APR over 5 years (60 months):
- Identify Scheduled Payment: $25,000 principal at 8.00% APR over 60 months = $506.91 per month.
- Calculate Standard Repayment Total:
$506.91 × 60 = $30,414.60 total paid($5,414.60 interest). - Add $100 Extra Principal Monthly: Total payment becomes $606.91 per month.
- Recalculate Accelerated Payoff: Loan pays off in 48 months (12 months early).
- Calculate Accelerated Total Paid:
$606.91 × 48 = $29,131.68 total paid($4,131.68 interest). - Determine Total Savings:
$5,414.60 - $4,131.68 = $1,282.92 saved in interest.
Frequently Asked Questions
How does loan amortization affect early repayments?
Because early loan payments consist mostly of interest, making extra principal repayments early in the loan term generates the highest compounding interest savings.
Can I make extra payments anytime without penalty?
Most consumer loans permit fee-free extra principal payments. Specify to your loan servicer that extra funds should apply directly to principal reduction rather than future monthly payments.
What is a loan repayment schedule?
A loan repayment schedule (amortization table) breaks down every scheduled payment into principal reduction, interest charges, and remaining balance over the life of the loan.
Should I pay off high-interest debt or invest extra cash?
Paying off high-interest debt (such as loans above 7% to 8% APR) provides a guaranteed, risk-free rate of return equal to the interest rate avoided.