Loan amortization
The payment is only the first number. Interest over the life of the loan is the honest one.
Monthly payment
$601
How amortization works
Each month, interest accrues on the remaining balance and the rest of your payment eats principal:
payment = P × r ÷ (1 − (1 + r)⁻ⁿ) r = APR ÷ 12, n = months Because interest rides on the balance, front-loading principal is disproportionately powerful early in a loan — that is what the extra-payment comparison measures. When a payment cannot even cover the month's interest, no term exists at all; this calculator says so rather than pretending.
Assumptions on the counter
- Fixed rate for the full term; variable-rate loans will drift.
- No fees, origination charges, or prepayment penalties modeled.
- Extras apply to principal immediately each month.
Questions people ask
How is a loan payment calculated?
The standard amortization formula: payment = P × r ÷ (1 − (1 + r)^−n), where P is the principal, r the monthly rate (APR ÷ 12), and n the number of months. Early payments are mostly interest; late ones are mostly principal.
How much does one extra payment a year save?
It depends on rate and term — on a $30,000, 5-year loan at 7.5%, adding $100/month cuts roughly four months and several hundred dollars of interest. Run your own numbers above; the comparison line updates as you type.
Does extra money go to principal automatically?
Not always. Some lenders apply surplus to next month's payment or escrow unless you mark it "apply to principal." The math here assumes every extra dollar hits principal directly.