How loan amortization works
A loan is "amortized" when you pay it off in fixed installments over a set term. Early in the loan, most of each payment goes toward interest; near the end, most goes toward principal. Understanding this front-loaded interest is the key to knowing whether extra payments are worth it for you.
Using the calculator
Enter your loan amount, interest rate, and term. The tool computes your monthly payment and shows a year-by-year breakdown. Add an optional extra monthly payment to see exactly how much interest you avoid — and how many months (or years) you knock off the loan.
Why extra payments are so powerful
Every extra dollar you pay goes straight to principal. Because future interest is calculated on the remaining balance, a modest overpayment early in a loan can save thousands and shorten the term dramatically. Even $50/month extra on a 30-year mortgage can cut the term by years.
Related tools
- Debt payoff calculator — multiple loans at once, snowball vs. avalanche.
- Compound interest calculator — the same math, working in your favor.