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Loan Prepayment Calculator
See what prepaying does to your loan. Enter the loan, then add a one-time lump sum and any extra you can pay each month to discover how much sooner you finish and how much interest you keep.
Written by TopicDrill Editorial Team·Updated June 2026
Balance with and without prepayments
Prepaying Original plan
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How the loan prepayment calculator works
The tool first derives the standard monthly payment from your loan amount, rate and original term. That payment becomes the baseline, the path you are on if you change nothing. It then applies your lump sum to the balance straight away and adds your extra monthly amount on top of the scheduled payment, amortizing the loan month by month until it clears.
The chart overlays the two journeys. The shaded orange curve is the loan with your prepayments and the dashed grey curve is the untouched original schedule. The earlier the orange line reaches zero, the more months and interest you have erased.
A worked example
Take a 200,000 dollar loan at 6 percent over 30 years. Drop in a 10,000 dollar lump sum today and add 200 dollars a month on top of the regular payment. The loan finishes years early and the interest bill falls by tens of thousands of dollars, because both the lump sum and every extra dollar attack principal that would otherwise have accrued interest for decades.
Things to keep in mind
Tell your lender to apply prepayments to principal, keep an emergency fund before tying up cash, and check for prepayment penalties on older or fixed-rate loans. For guidance on paying down debt without overstretching, the CFPB has neutral resources. To compare a steady extra payment without a lump sum, use our loan payoff calculator.
Frequently asked questions
What is the difference between a lump sum and a recurring prepayment?
A lump sum is a single one-off payment, such as a bonus or tax refund, applied to the loan today. A recurring prepayment is a smaller amount added on top of your regular payment every month. This calculator lets you model both at once, because together they often work better than either alone.
Does prepaying lower my monthly payment?
Usually not. Most loans keep the scheduled payment the same and instead shorten the term, so you finish earlier rather than paying less each month. The win shows up as fewer total payments and far less interest, not a lighter monthly bill.
How does a prepayment save interest if the rate stays the same?
Interest is charged on whatever you still owe. By knocking the balance down sooner, you shrink the amount every future interest charge is calculated on. The rate is unchanged, but it now applies to a smaller and faster-falling balance, so the interest adds up to much less over the life of the loan.
Should I prepay or invest the money instead?
It comes down to the loan rate versus what you could reliably earn elsewhere, after tax. Prepaying a loan is a guaranteed return equal to its interest rate. If your investments are expected to beat that rate over the same period, investing may win, but prepaying carries no market risk.
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