How loan payments work
Most installment loans are amortized: each fixed monthly payment covers that month's interest and a portion of principal. Early in the loan, most of each payment is interest; later, most goes to principal. The standard payment formula is P = (PV × r) / (1 − (1 + r)^−n), where r is the monthly rate and n is the number of payments.
Save by paying extra
Even small extra payments toward principal dramatically cut total interest and shorten the term. Try lowering the term here to see the trade-off between monthly payment size and total interest paid. For home loans including taxes and insurance, use the mortgage calculator.
Looking to consolidate a loan at a lower rate? Compare personal loan refinance offers here.