Discover how various extra payment plans impact your loan timeline and total interest paid.
Input your loan details to see the results.
Calculation Methodology Overview
1. Monthly Payment Derivation
The calculator applies the fixed-rate amortization formula:
M = P × [r(1 + r)^n] / [(1 + r)^n − 1]Variables:
• P – principal amount
• r – monthly interest rate
• n – total payments
2. Payment Allocation
For each installment:
• Interest = Current Balance × r
• Principal = M − Interest
• Updated Balance = Prior Balance − Principal
3. Additional Principal Payments
Any extra payment is applied to the principal, producing:
• Accelerated balance reduction
• Lower cumulative interest
• Shortened payoff duration
4. Payment Frequency Conversion
Payment frequencies are normalized to monthly equivalents:
• Monthly = 1
• Bi-weekly = 26/12 ≈ 2.17
• Annual = 1/year
5. Reference Framework
This approach aligns with:
• Standard amortization mathematics
• CFPB loan calculation guidance
• Federal Reserve interest computation practices
Note: These results are approximations. Actual lender calculations may differ.