Enter the principal, interest rate, and any extra principal amounts into the calculator to see how an extra principal payment affects your loan’s total cost and duration.

Extra Principal Payment Calculator

Related Calculators

Extra Principal Payment Formula

The following equation shows the total amount you choose to pay each month when you add an extra principal amount to your scheduled payment. (Extra principal payments typically do not change the required/scheduled monthly payment in your loan contract; they reduce the balance faster, which can shorten the payoff time and reduce total interest.)

TP = MP + E
  • Where TP is the total amount you pay each month (scheduled payment plus extra principal)
  • MP is the original/scheduled monthly payment required by the loan
  • E is the extra principal payment you choose to add

To calculate the total monthly amount you plan to pay, add the extra principal payment to the scheduled monthly payment.

What is an Extra Principal Payment?

Definition:

An Extra Principal Payment is an amount paid in addition to the regularly scheduled loan payment, directed specifically toward paying down the loan’s principal balance more quickly.

How to Calculate Extra Principal Payment?

Example Problem:

The following example shows how to compute the total amount you pay each month when you add extra principal. To estimate interest savings and a new payoff date, you must recalculate the loan’s amortization schedule (the calculator above does this for you).

First, determine the scheduled monthly payment required by your loan. In this example, the monthly payment is $1,200.

Next, determine the extra amount you plan to apply toward the principal. Let’s say you can pay an extra $300 each month.

Finally, calculate the total amount you will pay each month:

TP = MP + E

TP = $1,200 + $300

TP = $1,500 per month

FAQ

How does an extra principal payment reduce the overall cost of a loan?

By paying more toward the principal, the outstanding balance decreases faster, lowering the amount of interest that accumulates over time and potentially shortening the repayment schedule.

Is there any penalty for making extra principal payments?

Some lenders may impose prepayment penalties, so it’s always best to check the terms of your loan agreement or consult with your lender before making significant extra payments.

Can I make one-time extra payments or do I have to pay extra every month?

You can typically make extra principal payments either as a one-time lump sum or regularly each month, depending on what works best for your budget and loan terms.