Which option saves more?
Shortening the loan term usually saves more interest. Lowering the monthly payment creates more room in your budget.
See how extra principal payments can shorten your loan, lower your monthly payment, or help you keep your original payment amount.
| Metric | Shorten loan term | Lower monthly payment | Keep original payment |
|---|---|---|---|
| Payment after extra | $1,200 | $1,077 | $1,200 |
| Total interest | $81,769 | $105,342 | $81,769 |
| Interest saved | $34,262 | $10,688 | $34,262 |
| Term, months | 144 | 180 | 144 |
| Months saved | 36 | 0 | 36 |
| Payoff date | 9/1/2038 | 9/1/2041 | 9/1/2038 |
Baseline payment without extras: $1,200
Back to the loan calculatorYour lender may use different dates, rounding, and event ordering.
| № | Date | Payment | Principal | Interest | Extra | Balance |
|---|---|---|---|---|---|---|
| 1 | Oct 1, 2026 | $1,200 | $200 | $1,000 | — | $99,800 |
| 2 | Nov 1, 2026 | $1,200 | $202 | $998 | — | $99,598 |
| 3 | Dec 1, 2026 | $1,200 | $204 | $996 | — | $99,393 |
| 4 | Jan 1, 2027 | $1,200 | $206 | $994 | — | $99,187 |
| 5 | Feb 1, 2027 | $1,200 | $208 | $992 | — | $98,979 |
| 6 | Mar 1, 2027 | $1,200 | $210 | $990 | — | $98,769 |
| 7 | Apr 1, 2027 | $1,200 | $212 | $988 | — | $98,556 |
| 8 | May 1, 2027 | $1,200 | $215 | $986 | — | $98,341 |
| 9 | Jun 1, 2027 | $1,200 | $217 | $983 | — | $98,125 |
| 10 | Jul 1, 2027 | $1,200 | $219 | $981 | — | $97,906 |
| 11 | Aug 1, 2027 | $1,200 | $221 | $979 | — | $97,685 |
| 12 | Sep 1, 2027 | $11,200 | $10,223 | $977 | $10,000 | $87,461 |
Shortening the loan term usually saves more interest. Lowering the monthly payment creates more room in your budget.
Confirm posting dates, minimum amounts, rate changes, and how the lender recalculates the schedule.
A $100,000 loan at 12% a year over 15 years (180 payments) with one extra principal payment of $10,000 in month 12.
Example dates start from January 2026. The calculator form above starts from the current month: the amounts do not change, only the payment dates shift.
Without the extra payment, principal would overtake interest only from payment 112.
The extra payment reduces the balance in the month it is made and the schedule is rebuilt from there. Keeping the same payment shortens the term; lowering the payment keeps the term and reduces the monthly amount. Both variants are computed from the same inputs.
Lenders differ on posting dates, minimum extra-payment amounts, early-repayment fees and how they recalculate. Insurance and rate changes are not modelled.
These figures come from the same model as the calculator above — enter them and compare.
Lenders can use different posting dates, daily accrual, and rounding rules.
Yes. Add one-time or recurring extra principal payments in the calculator.
In the example below it falls from $1,200 to $1,077, but the loan still runs its full term, so the interest saved is smaller than when the term is shortened.