What this calculator tells you
It shows the full cost of a fixed-rate loan. Most car loans, personal loans and fixed-rate mortgages are repaid in equal monthly payments. Each payment covers that month's interest first, and the rest pays down what you owe. The table shows how that split changes every year.
The formula
Why early payments are mostly interest
Interest is charged on what you still owe, and you owe the most at the start. The Consumer Financial Protection Bureau explains that in an amortizing loan, part of each payment goes to principal and part to interest, and that early in the loan more of it generally goes to interest [1]. As the balance falls, the interest part shrinks and more of each payment clears the debt.
What paying extra does
Any amount above the required payment comes straight off the balance, so less interest builds up afterwards. In the example above, adding $100 a month clears the loan in 49 months instead of 60 and saves about $939 in interest. Use the "Extra each month" box to try your own number. Check first that your lender applies extra payments to the principal and does not charge a prepayment fee.
Debt is the other side of compound interest. When interest rates rise, new loans get more expensive, which this calculator makes easy to see.
Frequently asked questions
Does this work for mortgages?
For the loan part of a fixed-rate mortgage, yes. A real mortgage payment often also includes property tax and insurance, which this calculator leaves out.
What is APR?
APR is the yearly cost of borrowing, including interest and some fees. Enter the APR your lender quotes for the closest estimate.
Why is my lender's figure slightly different?
Lenders may round differently, count days instead of months, or add fees. Small differences of a few cents to a few dollars are normal.
Is it better to pay extra or save the money?
If the loan's interest rate is higher than what your savings earn, paying extra usually saves more. Keep an emergency fund first, because extra payments are hard to get back.
Sources
This calculator is for education. It assumes a steady rate every year, which real life rarely gives you, and it is not personal financial advice.