Loan Prepayment Calculator
Free loan prepayment calculator: enter your loan amount, rate and months paid to compare 'reduce payment' versus 'shorten term' and see how much interest each saves.
How to Use
- Enter loan details
Fill in the loan amount, annual rate, term and months already paid. The tool computes your current remaining principal.
- Enter the prepayment
Type the amount you plan to prepay and choose 'reduce payment' or 'shorten term'. The amount cannot exceed the remaining principal.
- Read the comparison
The results show the new monthly payment, remaining periods, interest saved and the original total interest, with an explanation of the chosen method.
FAQ
Which method saves more interest?
Keeping the payment and shortening the term usually saves much more, because it cuts the time interest accumulates. Reducing the payment lowers monthly pressure but saves less. The right choice depends on your cash flow.
Are there prepayment penalties?
Some banks charge a fee or require an appointment, usually stated in the loan contract — for example one month of interest if repaid within a certain number of years. Ask your bank first.
How is the new payment recalculated?
Banks typically either keep the original term and recompute the payment (reduce payment) or keep the payment and shorten the term automatically. This tool estimates with the equal-instalment model; the bank's calculation governs.
When is prepaying most worthwhile?
In equal-instalment loans interest is front-loaded, so the earlier you prepay the more you save. If your rate is low and you have better investment options, investing may beat prepaying.