How the monthly payment is worked out
A fixed-rate loan - a car loan, a personal loan, a mortgage - is repaid in equal monthly instalments. The calculator uses the standard amortization formula: payment = P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the annual rate divided by 12, and n is the number of months. Each month, interest is charged on the balance still owed, and the rest of the payment reduces that balance. That is why early payments are mostly interest and late payments are mostly principal.
Why extra payments save so much
An extra payment goes straight to the principal, so every later month is charged interest on a smaller balance. The scheduled payment stays the same, which means the loan simply ends sooner. On a long loan the effect is large: a small fixed amount added every month can take years off a mortgage. Enter an extra payment above and the result shows exactly how many months it removes and how much interest it saves.
Reading the amortization schedule
The schedule lists every payment with the split between principal and interest and the balance left afterwards. Switch to the yearly view for a summary, or download the full schedule as a CSV to open in Excel or Google Sheets. Check your loan agreement for prepayment penalties before paying extra - most car and personal loans have none, but some mortgages do.
Working out sales tax or VAT on a purchase as well? The VAT calculator adds or removes it at any rate, and the percentage calculator handles everything else.