Loan Extra Payment Calculator
On a $250,000 loan at 6.5% over 360 months, paying $200 extra a month saves $97,618.44 of interest and finishes 95 months early. Compare monthly, lump-sum, and annual extra payments.
Last reviewed
Your extra-payment results
Interest Saved
$97,618.44
Months Saved
95
New Payoff Time
265 months
Adding $200.00 a month to your $1,580.17 payment pays off the loan in 22 years and 1 month (265 months), which is 95 months sooner than the 360 months scheduled.
Total interest drops from $318,861.58 to $221,243.14, saving $97,618.44 across $52,800.00 of extra principal.
Month 1 is $1,354.17 of interest and $426.00 of principal ($226.00 plus $200.00 extra), and the last payment in month 265 is $1,278.26.
Your loan and extra payments
- M = $1,580.17 (360 scheduled payments)
- Month 1 interest = $250,000.00 × 6.5% ÷ 12 = $1,354.17
- Month 1 principal = $226.00 + $200.00 = $426.00
- Scheduled interest (360 mo) = $318,861.58
- Interest with extra (265 mo) = $221,243.14
- Interest saved = $318,861.58 − $221,243.14 = $97,618.44
Remaining balance at the end of each year
Cumulative interest paid by year
Ways to pay extra on this loan
| Plan | Monthly payment | Extra added | Payoff months | Total interest | Interest saved |
|---|---|---|---|---|---|
| Scheduled loan (no extra) | $1,580.17 | None | 360 | $318,861.58 | $0.00 |
| Your extra-payment plan | $1,780.17 | $200.00/mo | 265 | $221,243.14 | $97,618.44 |
| Monthly extra only | $1,780.17 | $200.00/mo | 265 | $221,243.14 | $97,618.44 |
| One-time lump sum only | $1,580.17 | None | 360 | $318,861.58 | $0.00 |
| Annual extra only | $1,580.17 | None | 360 | $318,861.58 | $0.00 |
| Biweekly equivalent (+1/12 payment/mo) | $1,711.85 | $131.68/mo (1/12 payment) | 290 | $246,147.98 | $72,713.60 |
| Lump sum + recast (lower payment) | $1,564.83 | $2,400.00 at mo 12 + recast | 360 | $315,921.77 | $2,939.81 |
Every plan starts from the $1,580.17 scheduled payment at 6.5%. The biweekly row adds $131.68 a month (one-twelfth of $1,580.17, matching 26 half-payments a year), and the recast row applies $2,400.00 in month 12 (from $2,400.00 planned, a stand-in lump sum because none is entered) and re-amortizes the remaining balance to $1,564.83 a month.
Year-by-year balance and cumulative interest
| Year | Scheduled balance | Balance with extra | Scheduled interest to date | Interest to date with extra | Interest saved to date |
|---|---|---|---|---|---|
| 1 | $247,205.69 | $244,732.88 | $16,167.73 | $16,094.92 | $72.81 |
| 2 | $244,224.24 | $239,113.01 | $32,148.32 | $31,837.09 | $311.23 |
| 3 | $241,043.13 | $233,116.78 | $47,929.25 | $47,202.90 | $726.35 |
| 4 | $237,648.95 | $226,718.95 | $63,497.11 | $62,167.11 | $1,330.00 |
| 5 | $234,027.48 | $219,892.66 | $78,837.68 | $76,702.86 | $2,134.82 |
| 6 | $230,163.45 | $212,609.21 | $93,935.69 | $90,781.45 | $3,154.24 |
| 7 | $226,040.65 | $204,837.95 | $108,774.93 | $104,372.23 | $4,402.70 |
| 8 | $221,641.74 | $196,546.24 | $123,338.06 | $117,442.56 | $5,895.50 |
| 9 | $216,948.23 | $187,699.23 | $137,606.59 | $129,957.59 | $7,649.00 |
| 10 | $211,940.39 | $178,259.71 | $151,560.79 | $141,880.11 | $9,680.68 |
| 11 | $206,597.15 | $168,188.00 | $165,179.59 | $153,170.44 | $12,009.15 |
| 12 | $200,896.07 | $157,441.79 | $178,440.55 | $163,786.27 | $14,654.28 |
| 13 | $194,813.19 | $145,975.88 | $191,319.71 | $173,682.40 | $17,637.31 |
| 14 | $188,322.93 | $133,742.06 | $203,791.49 | $182,810.62 | $20,980.87 |
| 15 | $181,397.99 | $120,688.95 | $215,828.59 | $191,119.55 | $24,709.04 |
| 16 | $174,009.28 | $106,761.63 | $227,401.92 | $198,554.27 | $28,847.65 |
| 17 | $166,125.71 | $91,901.57 | $238,480.39 | $205,056.25 | $33,424.14 |
| 18 | $157,714.19 | $76,046.30 | $249,030.91 | $210,563.02 | $38,467.89 |
| 19 | $148,739.32 | $59,129.18 | $259,018.08 | $215,007.94 | $44,010.14 |
| 20 | $139,163.40 | $41,079.07 | $268,404.20 | $218,319.87 | $50,084.33 |
| 21 | $128,946.16 | $21,820.13 | $277,149.00 | $220,422.97 | $56,726.03 |
| 22 | $118,044.65 | $1,271.37 | $285,209.53 | $221,236.25 | $63,973.28 |
| 23 | $106,413.04 | $0.00 | $292,539.96 | $221,243.14 | $71,296.82 |
| 24 | $94,002.44 | $0.00 | $299,091.40 | $221,243.14 | $77,848.26 |
| 25 | $80,760.69 | $0.00 | $304,811.69 | $221,243.14 | $83,568.55 |
| 26 | $66,632.10 | $0.00 | $309,645.14 | $221,243.14 | $88,402.00 |
| 27 | $51,557.30 | $0.00 | $313,532.38 | $221,243.14 | $92,289.24 |
| 28 | $35,472.90 | $0.00 | $316,410.02 | $221,243.14 | $95,166.88 |
| 29 | $18,311.31 | $0.00 | $318,210.47 | $221,243.14 | $96,967.33 |
| 30 | $0.00 | $0.00 | $318,861.58 | $221,243.14 | $97,618.44 |
End-of-year balances and cumulative interest for each loan year. With extra payments the balance reaches $0.00 in year 23 (month 265) at $221,243.14 of cumulative interest, while the scheduled loan runs through year 30 and reaches $318,861.58 ($97,618.44 more).
Monthly payment schedule with extra payments
Show every monthly payment
| Month | Total payment | Interest | Scheduled principal | Extra principal | Remaining balance |
|---|
Each row rounds the month's interest half up to the cent on the prior balance. Scheduled principal is $1,580.17 less that month's interest, extra principal is capped at the remaining balance, and the final payment in month 265 is $1,278.26.
Same loan, different extra monthly payments
Increasing the extra monthly payment from $0.00 to $1,000.00 cuts the payoff time from 360 months to 138 months and raises total interest saved from $0.00 to $213,459.23.
| Extra monthly | Payoff months | Months saved | Total interest | Interest saved | Total extra paid |
|---|---|---|---|---|---|
| $0 | 360 months | 0 | $318,861.58 | $0.00 | $0.00 |
| $50 | 329 months | 31 | $285,950.12 | $32,911.46 | $16,400.00 |
| $100 | 304 months | 56 | $260,001.40 | $58,860.18 | $30,300.00 |
| $150 | 283 months | 77 | $238,869.66 | $79,991.92 | $42,300.00 |
| $200 (closest to your input) | 265 months | 95 | $221,243.14 | $97,618.44 | $52,800.00 |
| $300 | 236 months | 124 | $193,347.32 | $125,514.26 | $70,500.00 |
| $400 | 214 months | 146 | $172,123.62 | $146,737.96 | $85,200.00 |
| $500 | 195 months | 165 | $155,345.27 | $163,516.31 | $97,212.12 |
| $750 | 162 months | 198 | $125,373.82 | $193,487.76 | $120,750.00 |
| $1,000 | 138 months | 222 | $105,402.35 | $213,459.23 | $137,338.89 |
Same loan, different one-time lump sums
Applying a one-time payment in month 12 from $0.00 to $50,000.00 shortens the loan from 265 months to 179 months and lifts total interest saved from $97,618.44 to $201,645.72.
| One-time lump sum | Payoff months | Months saved | Total interest | Interest saved | Recast payment |
|---|---|---|---|---|---|
| $0 (closest to your input) | 265 months | 95 | $221,243.14 | $97,618.44 | $1,564.83 |
| $2,500 | 260 months | 100 | $214,068.78 | $104,792.80 | $1,564.19 |
| $5,000 | 255 months | 105 | $207,169.52 | $111,692.06 | $1,548.21 |
| $10,000 | 244 months | 116 | $194,141.05 | $124,720.53 | $1,516.25 |
| $15,000 | 235 months | 125 | $182,047.85 | $136,813.73 | $1,484.29 |
| $20,000 | 226 months | 134 | $170,797.25 | $148,064.33 | $1,452.33 |
| $25,000 | 217 months | 143 | $160,311.37 | $158,550.21 | $1,420.37 |
| $50,000 | 179 months | 181 | $117,215.86 | $201,645.72 | $1,260.56 |
How extra principal payments shorten a loan
Each month on a fixed-rate loan, the lender charges one-twelfth of the annual rate on what you still owe. Interest comes out of your payment first, and the rest cuts the balance. In its answer on auto loan schedules, the Consumer Financial Protection Bureau (CFPB) notes: "The chart showing the amount of your payment that goes toward your principal and interest is called an amortization schedule." On $250,000 at 6.5% over 360 months, the scheduled payment is $1,580.17. Month 1 is $1,354.17 of interest and $226.00 of principal.
When you add extra money to a payment, the regular payment already paid that month's interest. Every extra dollar goes straight to the balance. As the CFPB's answer on paying interest or principal on an auto loan states: "The quicker you’re able to pay down the principal of your loan – or the amount of money you’re borrowing – the less interest you’ll have to pay." Adding $200.00 in month 1 lifts principal to $426.00. Month 2's interest then drops from $1,352.94 to $1,351.86.
Why an extra $200 a month saves $97,618.44 and 95 months
Each extra dollar cuts interest in two ways. First, you stop paying the 6.5% rate on that dollar for the rest of the loan. Second, because next month's interest is smaller, more of your regular $1,580.17 payment goes to principal in every month after.
On $250,000 at 6.5% over 360 months, the full schedule charges $318,861.58 of interest. Adding $200.00 a month puts $52,800.00 of extra money into the loan across 264 payments. It finishes in month 265 with a final payment of $1,278.26, and total interest falls to $221,243.14. That saves $97,618.44 and 95 months (7 years and 11 months). Adding $100.00 a month saves $58,860.18 and 56 months, finishing in 304 months. Adding $500.00 a month saves $163,516.31 and 165 months, finishing in 195 months. See the baseline schedule in the loan amortization calculator.
When you pay matters too. Paying $2,400.00 once a year in every 12th month puts the same $52,800.00 into the loan as $200.00 a month. Yet the annual plan finishes in 268 months with $224,725.65 of interest, saving $94,135.93. Paying monthly saves $3,482.51 more and finishes 3 months sooner because each $200.00 cuts the balance right away.
Biweekly half-payments, lump-sum curtailments, and mortgage recasting
A biweekly plan pays half of the monthly bill every two weeks. A year has 52 weeks, or 26 biweekly pay periods. Those 26 half-payments equal 13 full monthly payments a year, or one extra payment spread over 12 months. On a $1,580.17 payment, one-twelfth is $131.68 a month. You need not pay a fee to a biweekly service. Adding $131.68 a month on your own finishes the default loan in 290 months (70 months early) and saves $72,713.60 of interest. You can also compare a 15-year loan against a 30-year loan in the 15 vs 30 year mortgage calculator.
A one-time lump sum is called a principal curtailment. Fannie Mae's Servicing Guide C-1.2-01 states: "The servicer must immediately accept and apply an additional principal payment (referred to as a principal curtailment) identified by the borrower as such for a current mortgage loan." On the default loan, $10,000.00 in month 12 at the $1,580.17 payment finishes in 323 months (37 months early) and saves $49,273.49. Combining $200.00 a month, $10,000.00 in month 12, and $1,200.00 each year finishes in 220 months (140 months early) and saves $146,352.82.
If you want a lower monthly bill instead of a shorter term, ask your servicer for a recast (Fannie Mae Form 181). After $10,000.00 in month 12, a recast spreads the remaining $237,205.69 balance over the 348 months left. That drops the required payment by $63.92 to $1,516.25 and saves $12,245.86 of interest over 360 months. On $25,000.00 in month 24, keeping the old payment saves 78 months and $98,691.76. Recasting drops the payment by $161.75 to $1,418.42 and saves $29,352.22. Compare both paths in the mortgage recast calculator.
Extra-payment amortization formula
r = annual rate ÷ 12 M = round_cent(P × r × (1 + r)^n ÷ ((1 + r)^n − 1)) interest_m = round_cent(B_(m−1) × r) scheduled_principal_m = min(B_(m−1), M − interest_m) extra_m = min(B_(m−1) − scheduled_principal_m, extra_monthly + lump_m + annual_m) B_m = B_(m−1) − scheduled_principal_m − extra_m P loan amount · r monthly rate · n remaining months · M scheduled payment · B_m balance after month m
Worked examples across mortgages, car, personal, and student loans
On a $300,000 home loan at 6% for 360 months, the payment is $1,798.65 (last payment $1,800.09) and total interest is $347,515.44. On the $250,000 default loan, the first 60 payments pay off $15,972.52 of principal. Adding $100.00 a month to the $300,000 loan finishes in 313 months (47 months early) and saves $53,346.83 ($53,346.41 unrounded). Adding $200.00 a month finishes in 279 months (81 months early) and saves $91,173.87 ($91,173.43 unrounded). A $10,000.00 payment in month 12 finishes in 331 months (29 months early) and saves $42,805.57 ($42,805.58 unrounded). If recast instead, that $10,000.00 cuts the payment by $60.70 to $1,737.95.
On a $30,000 car loan at 7.54% for 60 months, the payment is $601.71 and the interest is $6,102.52. Adding $100.00 a month ($701.71 in all) pays off the car in 50 months, 10 months early. Total interest drops to $5,046.55, saving $1,055.97 across $4,961.05 of extra principal.
On a $10,000 personal loan at 12% for 36 months, the payment is $332.14 and interest is $1,957.18. Adding $100.00 a month finishes in 27 months (9 months early) and saves $526.25 ($1,430.93 interest). Check upfront fees in the personal loan calculator. On a $35,000 student loan at 6.52% for 120 months ($397.77 payment, $12,733.13 interest), $100.00 extra a month finishes in 89 months (31 months early) and saves $3,516.84 ($9,216.29 interest).
How servicers apply extra payments and how to avoid paid-ahead status
Extra money only cuts future interest when the servicer puts it toward principal instead of holding it for next month's bill. In its answer on how student loan payments are applied, the CFPB explains: "If you plan to pay more than your minimum monthly payment, you can instruct your lender or servicer to apply the excess payment directly to the principal balance." On the same page, the CFPB gives an example of paying $300 on a $115 bill. If the servicer pushes your due date ahead, February shows $0 due and March bills $65. Skipping February then leaves your balance and interest higher.
For federal Direct Loans, Department of Education rule 34 CFR 685.211(a)(2) states: "A borrower may prepay all or part of a loan at any time without penalty." Under 34 CFR 685.211(a)(1)(i), payments go first to fees, second to interest, and third to principal; for the Income-Based Repayment and Repayment Assistance plans, 34 CFR 685.211(a)(1)(ii) uses a different order. Under 34 CFR 685.211(a)(3)(ii), a prepayment at or above the monthly bill moves the next due date forward unless you ask not to advance it. Use the student loan repayment calculator to compare plans.
For a mortgage on your main home, Regulation Z comment 36(c)(1)(i)-1 (12 CFR 1026.36(c)(1)(i)) states: "Under § 1026.36(c)(1)(i), a mortgage servicer must credit a payment to a consumer's loan account as of the date of receipt." Under 12 CFR 1026.36(c)(1)(iii), if a payment does not follow the servicer's written rules, the servicer may take up to 5 days to credit it. Always mark extra funds as principal-only.
Why your lender's numbers can differ: cent rounding, daily interest, and precomputed rebates
Whole-cent rounding. Lenders collect payments in whole cents. Regulation Z comment 17(c)(3)-1 (12 CFR 1026.17(c)(3)) explains: "Because payments cannot be collected in fractional cents, it is often difficult to amortize exactly an obligation with equal payments; the amount of the last payment may require adjustment to account for the rounding of the other payments to whole cents." This page rounds the payment ($1,580.1701 to $1,580.17) and each month's interest half up to the cent. On the default loan, whole-cent rounding gives $97,618.44 of interest saved versus $97,618.12 from an unrounded formula ($0.32 more, because baseline interest is $318,861.22 unrounded and accelerated interest is $221,243.10 unrounded). On $320,000 at 6.25% over 360 months with $644.37 extra a month, both finish in 196 months. Interest here is $190,640.11 ($198,662.94 saved) versus $190,640.85 unrounded ($0.74 higher).
Daily simple interest. A monthly mortgage charges one-twelfth of the annual rate each month. Auto and personal loans often count the exact days between payments. In its answer on simple versus precomputed auto loan interest, the CFPB writes: "The amount of interest you pay each month is calculated based on your actual outstanding balance on the day your payment is due." On $30,000.00 at 7.54% on a 365-day year, interest is $6.1973 a day. Paying 10 days late adds $61.97 of interest before your payment cuts principal. Check day counts in the daily interest calculator.
Precomputed rebates. A precomputed loan figures all the interest at the start. If you pay it off early, 15 U.S.C. 1615(a)(1) states: "If a consumer prepays in full the financed amount under any consumer credit transaction, the creditor shall promptly refund any unearned portion of the interest charge to the consumer." Under 15 U.S.C. 1615(b), on a consumer loan longer than 61 months, the refund must be at least as large as the actuarial method's, which bans the Rule of 78s (sum-of-the-digits). On $30,000.00 at 7.54% for 60 months paid off at month 24, the actuarial method charges $3,773.27 and refunds $2,329.25. The sum-of-the-digits formula charges $3,881.60 and refunds $2,220.92, which is $108.33 less. On a 72-month loan paid off at month 24, that sum-of-the-digits formula banned by 15 U.S.C. 1615(b) would charge $159.26 more.
Prepayment penalties and how to check your Loan Estimate
Before you send a big lump sum, check your loan papers for a prepayment penalty. In its answer on mortgage prepayment penalties, the CFPB notes: "Prepayment penalties do not normally apply if you pay extra principal on your mortgage in small chunks at a time–but it’s always a good idea to double check with the lender." Page 1 of a mortgage Loan Estimate, under Loan Terms, shows whether the loan has a penalty.
Under 12 CFR 1026.43(g)(1), a home loan cannot have a prepayment penalty unless it is a qualified mortgage that is not higher-priced and whose APR cannot increase. Official comment 43(g)(2)-1 states: "Section 1026.43(g)(2) establishes the maximum period during which a prepayment penalty may be imposed and the maximum amount of the prepayment penalty." Under 12 CFR 1026.43(g)(2)(i) and (ii), a qualified mortgage penalty ends after 3 years (36 months). It cannot top 2% of the prepaid balance in years 1 and 2 ($5,000.00 on $250,000.00) or 1% in year 3 ($2,500.00).
You can see this on the CFPB's sample Loan Estimate, form H-24(B), whose cover page states: "This loan is for the purchase of property at a sale price of $180,000 and has a loan amount of $162,000, a 30-year loan term, a fixed interest rate of 3.875 percent, and a prepayment penalty equal to 2.00 percent of the outstanding principal balance of the loan for the first two years after consummation of the transaction." Page 1 prints a $761.78 payment and a max 2-year fee of $3,240. Page 3 prints $15,773 of principal paid off in 5 years, rounded from $15,772.58 in the first 60 months. Adding $100.00 a month to that $162,000 loan cuts interest from $112,243.70 to $87,667.48, saving $24,576.22 and 70 months (290 months total). To aim for a target payoff year, use the mortgage payoff calculator.
Assumptions and limitations
- The interest rate is fixed for the whole term. Interest is one-twelfth of the annual rate each month (q ÷ 1,200,000).
- The scheduled payment and each month's interest round half up to whole cents (Regulation Z comment 17(c)(3)-1). The last payment clears the exact balance left.
- Every extra monthly, lump-sum, and annual payment goes 100% to principal in the month paid. It does not lower future monthly bills unless you recast.
- Principal and interest only. Property tax, home insurance, mortgage insurance, and HOA dues in escrow are left out.
- No late fees, suspense accounts, or prepayment penalties are taken out of your extra payments.
- Loan amounts run from $100 to $100,000,000, rates from 0% to 100% (up to three decimals), and terms from 1 to 600 months. The $250,000, 6.5%, 360-month, and $200 defaults are examples, not rate quotes.
These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.
What to check before sending extra principal
Mark every extra payment as principal-only in your servicer's portal, then check next month's bill to confirm the balance dropped by the full extra amount. On the default $250,000 loan at 6.5%, $200.00 a month saves $97,618.44 and 95 months. Check your month-by-month baseline in the loan amortization calculator.
Check your loan contract for a prepayment penalty before you send a lump sum. In its answer on prepaying an auto loan without penalty, the CFPB advises: "If you already have an auto loan that you’d like to pay off early, check your contract to see whether it contains a prepayment penalty clause." On a daily-interest car loan at 7.54%, paying 10 days late adds $61.97 of interest in the daily interest calculator.
Pick between a shorter term and a lower monthly bill when you have a lump sum. Keeping your scheduled bill after a month-12 curtailment on the default $250,000 loan saves $49,273.49 and 37 months, whereas recasting saves $12,245.86 over the full 360 months. Compare both in the mortgage recast calculator.
Compare your loan's rate against what your cash could earn after tax, once you have a cash buffer and any 401(k) match. Paying down a 6.5% loan earns a sure 6.5% return. Test your tax rate and market return in the pay off debt or invest calculator, or check a shorter loan in the 15 vs 30 year mortgage calculator.
Frequently asked questions
Does paying extra principal lower my monthly payment or shorten my loan term?
Paying extra principal keeps your monthly bill the same and cuts the final bill or shortens the loan term. On $250,000 at 6.5% over 360 months, $200.00 extra a month cuts 95 months off the loan and saves $97,618.44 of interest. To lower your scheduled monthly bill to $1,516.25 after a month-12 lump sum instead, ask your servicer for a recast.
Is it better to pay $200 extra every month or $2,400 once a year?
Paying $200.00 every month beats paying $2,400.00 once a year because each monthly payment cuts the balance up to 11 months sooner. On the default $250,000 loan at 6.5% over 360 months, monthly extra payments save $3,482.51 more interest and finish 3 months earlier than the annual lump sum.
How much does one extra mortgage payment a year or a biweekly schedule save?
Paying half of your monthly bill every two weeks makes 26 half-payments, or 13 full payments a year. You get the same result without biweekly service fees by adding one-twelfth of your bill ($131.68 a month on the default $250,000 loan at 6.5%). That extra monthly amount cuts 70 months off the 360-month schedule and saves $72,713.60 of interest.
What is paid-ahead status, and why can it reduce my interest savings?
Paid-ahead status means the servicer counts your extra money toward next month's bill instead of cutting principal on top of your regular schedule. Under 34 CFR 685.211(a)(3)(ii) on federal Direct Loans, a prepayment at or above the monthly bill pushes the due date forward unless you ask not to advance it. If you then skip the next bill, your balance stops falling ahead of schedule. Keeping regular monthly bills going on the $35,000 student loan example saves $3,516.84 and 31 months.
Can my lender charge a prepayment penalty for making extra payments?
Federal Direct Loans never charge a prepayment penalty under 34 CFR 685.211(a)(2), and non-qualified or higher-priced mortgages cannot charge one under 12 CFR 1026.43(g)(1). When a qualified mortgage has a penalty, 12 CFR 1026.43(g)(2) caps it at 2% of the prepaid balance in years 1 and 2 and 1% in year 3, dropping to $0.00 after 36 months. Auto and personal loan rules depend on your contract and state law, and 15 U.S.C. 1615(b) bans Rule of 78s refunds on precomputed consumer loans over 61 months.
Why does a lump sum save more interest in year 1 than later in the loan?
A lump sum stops interest on that part of the balance for every month left in the loan. On $250,000 at 6.5% over 360 months, a $10,000.00 curtailment in month 12 saves $49,273.49 and 37 months, while the same $10,000.00 in month 24 saves $45,885.97 and 35 months. Waiting leaves fewer months for the lower balance to save interest.
Why can my servicer's payoff total differ by a few dollars from an online calculator?
Lenders collect payments in whole cents (12 CFR 1026.17(c)(3), comment 17(c)(3)-1). Rounding each month's interest half up on the default $250,000 loan with $200.00 extra changes total interest by $0.04 compared with an unrounded formula. On a daily simple-interest auto loan, interest also accrues at $6.1973 a day between payment dates, so late payments add extra interest.
Sources
- CFPB, What is amortization and how could it affect my auto loan? (page reviewed Sep 24, 2024)
- CFPB, What's the difference between a simple interest rate and precomputed interest on an auto loan? (page reviewed Jan 30, 2024)
- CFPB, Can I prepay my loan at any time without penalty? (page reviewed Jan 30, 2024)
- CFPB, Is it better to pay off the interest or principal on my auto loan? (page reviewed Jan 30, 2024)
- CFPB, How is my student loan payment applied to my account? (page reviewed Apr 15, 2024)
- CFPB, What is a prepayment penalty? (page reviewed Sep 11, 2024)
- CFPB, Sample Loan Estimate for a fixed-rate loan (form H-24(B)) (form dated Feb 7, 2014)
- Regulation Z, 12 CFR 1026.17, general disclosure requirements (CFPB text) (current version)
- Regulation Z, 12 CFR 1026.36, credit secured by a dwelling (CFPB text) (current version)
- Regulation Z, 12 CFR 1026.43, minimum standards for transactions secured by a dwelling (CFPB text) (current version)
- 15 U.S.C. 1615, prompt refund of unearned interest upon prepayment (Cornell LII text) (current version)
- Department of Education, 34 CFR 685.211, miscellaneous repayment provisions (eCFR) (current version)
- Fannie Mae, Servicing Guide C-1.2-01, Processing Additional Principal Payments (page modified Nov 13, 2024)
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