Learn how extra monthly or lump-sum payments speed up your payoff and lower interest costs.
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How We Figure Out Your Loan Details
The Monthly Formula
Your monthly payment comes from a standard loan formula:
M = P × [r(1 + r)^n] / [(1 + r)^n − 1]It simply uses the loan amount, interest rate, and loan length.
Interest vs. Principal
Every time you make a payment:
• Part of it goes to interest
• The rest goes to principal
• Your new balance is the old one minus the principal you just paid
How Extra Payments Help You Save
When you add extra money:
• It cuts down the principal directly
• The interest drops because the balance gets smaller
• You finish the loan faster and save a lot of money
Payment Frequency Explained
To compare different options, everything is converted to monthly numbers:
• Monthly = once a month
• Bi-weekly = about 2.17 payments a month
• Yearly = once per year
Where These Rules Come From
We follow common amortization formulas, CFPB guidance, and Federal Reserve standards.
Just keep in mind: your lender’s exact numbers may vary.