The accelerated payment calculator will calculate the effect of making extra principal payments. A very small extra principal payment made along with a regular payment can save the borrower a large amount of interest over the life of a loan, particularly, if those payments are started when the loan is relatively new.
For example, assume that you have taken out a loan for $130,000, for 360 monthly periods with an annual interest rate of 7 3/4%. If, with the 49th payment, you start to pay an extra $225, you will save $75,901.42 in interest payments and the loan will be paid off in 234 payments instead of the original 360 payments.
It is very easy to quickly calculate many different scenarios. Note that the higher the interest rate, the greater the savings for any extra payment amount. Also, for a normal amortizing loan, the interest savings will be greater the sooner the extra payments start. That is, you will save a lot more in interest if you pay an extra $50 a month for the last 20 years than if you pay an extra $100 a month for the last 10 years.
As with many of our other calculators, this calculator will also solve for an unknown input. For example, if you want the calculator to calculate the regular monthly payment, enter '0' (zero) for the "Periodic Payment" and a non-zero values for "Amount of Loan", "Total Months", and "Annual Interest Rate".
If you do not enter a '0' value, the calculator will use your inputs. This allows you to use any payment amount that you need.
Update 09/01/2012: New!: Now with printable payment schedule showing your extra payments applied to principal. Also added three charts to aid in visualizing cash flow.
This extra payment calculator is used for calculating the interest saved on a loan after extra payments are made. The reduction in the number of total payments is also calculated. Please click on the above "Help" button for details.
Here's an easy to understand, but detailed article discussing how to reduce your loan carrying costs i.e. save interest expense.
If you weren't looking for an extra payment calculator, here is our online loan calculator that will calculate the normal payment or loan amount for you (as well as the term or interest rate).
note: "Extra payment" in some ways is a misnomer. The payment is extra only in the sense the amount is not due at the time the extra principal payment is being paid. That is, the borrower is paying more than what is required, so in that sense it is "extra". But in a larger sense, it is not "extra". The "extra payment" is being used to reduced the principal loan balance. The borrower owes that money, so in that sense, the "extra" is not "extra" but rather just "early". Paying what is owed early, is what results in the interest savings.
Likewise, our charts show "prepaid principal". Prepaid principal is the principal paid early by the extra payments.
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Time Value of Money