Extra Payment Savings Calculator

It depends on the balance and APR, but the leverage is consistently strong on higher-rate debt. On an $18,000 loan at 9.5% APR with a $400 baseline monthly payment, an extra $100 a month cuts about 1 year and 4 months off the payoff and saves roughly $1,000 in interest. The same $100 against a 4% mortgage saves less per dollar — extra payments are most powerful against the highest-rate debt you have.

Mathematically, a lump sum applied immediately almost always saves more interest than spreading the same amount across future months. That's because a dollar paid today stops accruing interest immediately, while a dollar paid six months from now lets interest accrue on it in the meantime. The exception is when you can't afford the lump sum without raiding an emergency fund — keep the cushion and split the difference. We have a dedicated lump-sum-vs-extra-monthly calculator for that exact comparison.

Usually, but not always. Most US auto, mortgage, and personal loan lenders apply anything above the scheduled payment to principal by default. A few will instead 'pre-pay' future months — meaning they don't reduce the interest charge, just push your next due date out. Call your lender or check the loan agreement; on most loans you can specify 'apply to principal' to be sure. Credit cards always apply over-minimum payments to the highest-APR balance first by federal law.

Rule of thumb: pay off debt above ~7% APR before investing in a taxable brokerage, since you're effectively earning a guaranteed risk-free return equal to the APR by avoiding the interest. Mortgage debt under 5% APR is usually a tossup. High-interest credit card debt (15-25%) is almost always the better target than investing — you'd need an unrealistic stock-market return to match it. This calculator doesn't model the investment side; we have a separate compound-interest calculator on our sister site that does.

Most modern consumer loans have no prepayment penalty, but check your loan agreement. Some auto loans and a few mortgages charge a penalty if the loan is paid off within the first 2-3 years. If you're considering a large lump sum and the loan is recent, run the numbers with the penalty included before sending the payment.

No, paying down debt always helps your score in the long run by lowering credit utilization. There's a small temporary dip when a credit account is closed (which can happen after a credit card is paid to zero and the issuer closes it), because your total available credit drops. Personal and auto loans simply mark as 'paid in full' — no negative impact.