Loan Prepayment Calculator
Put a lump sum or a little extra each month against your loan and see exactly what it buys you — in interest saved and in months removed from the term.
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How it works
Every extra amount you pay goes straight at the principal, and the interest that principal would have generated for the rest of the term disappears with it. That is why a prepayment early in a loan is worth far more than the same amount paid late.
You then face a choice most lenders will offer: keep paying the same instalment and finish sooner, or keep the original end date and pay less each month. Cutting the term almost always saves more interest, so that is the headline figure here; the reduced instalment is shown alongside it.
Interest saved = interest(original schedule) − interest(schedule after prepayment)
- Outstanding — the balance remaining today, not the amount originally borrowed
- Lump sum — a one-off payment made now, on top of this month’s instalment
- Extra monthly — an additional amount added to every future instalment
Worked example
A 300,000 balance at 7% with 20 years left, prepaying 25,000 now
Inputs
Results
A 25,000 payment removes 65,264 of future interest — that is the real return on the prepayment, and it is tax-free.
Frequently asked questions
Should I cut the term or cut the instalment?
Cutting the term saves substantially more interest, because the balance is cleared sooner and stops accruing. Cutting the instalment only helps if you need the monthly cash flow. Both figures are shown so you can weigh them.
Is it better to prepay early or late in the loan?
Early, and by a wide margin. Interest is charged on the outstanding balance, so a prepayment in year two removes far more future interest than the same sum in year fifteen.
What about prepayment penalties?
Some loans charge a fee on early repayment, often a percentage of the amount prepaid. This calculator does not model that — subtract any fee from the interest saved to get your true net benefit.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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