A small amount extra each month can shave years and thousands in interest off a loan.
An extra payment calculator shows how much time and interest you save by adding a fixed amount to each loan payment. Even a small extra amount, applied to principal, can shorten a loan by years.
On a fixed-rate loan the early payments are mostly interest, because the balance is largest then. A dollar of extra principal in year one avoids interest on that dollar for the entire remaining term, so the same extra payment saves far more early in the loan than late. If you're going to pay extra, starting sooner multiplies the benefit.
Extra payments only accelerate a loan if the lender applies them to principal rather than to next month's payment. Many servicers require you to specify this, check the statement to confirm the balance is dropping faster. Also confirm there's no prepayment penalty, which a few loans still carry, before committing to a payoff plan.
Yes, extra payments go straight to principal, so you owe interest on a smaller balance every month afterward. The earlier you start, the more you save.
If your loan rate is higher than what you'd reliably earn investing, paying it down is a guaranteed return. For low-rate loans, investing may win. Weigh both.
No, they shorten the loan rather than reduce the required payment. Ask your lender to apply extra amounts to principal.
See the exact formula and a worked example on our methodology page.