Is overpaying better than investing?
For high-interest debt (18-25%), overpayments always win. For mortgages (3-7%), investing might earn more. Debt payoff provides guaranteed returns.
Finance
Loan Overpayment Savings Calculator
Calculate how additional monthly overpayments impact your loan’s interest and payoff time.
Maximise Loan Savings
Compare normal vs. overpayment scenarios for a clearer financial picture.
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What this calculator does
Making additional payments beyond required amounts dramatically reduces interest costs and shortens loan terms. This calculator compares payoff with and without overpayments, quantifying time and money saved.
How it works
The calculator simulates month-by-month amortization with and without extra payments. It shows months saved, total interest reduced, and provides comparison scenarios with different overpayment amounts.
Formula
Each month: Interest = Balance × (Rate ÷ 12). Principal = Payment − Interest. With extra: Principal = Payment + Extra − Interest. Interest Saved = Regular Interest − Overpayment Interest. Time Saved = Regular Months − Overpayment Months.
Tips for using this calculator
- Direct overpayments specifically to principal—note 'apply to principal' on payments
- Start with any amount—even $50 monthly adds up
- Focus on high-interest debt first
- Use tax refunds for lump-sum extra payments
- Track progress to stay motivated
Frequently asked questions
Will extra payments hurt my credit?
No, overpayments improve credit by demonstrating responsibility and reducing debt-to-income ratio.
Can I overpay any loan?
Most loans allow overpayment without penalty. Verify your agreement—some have prepayment penalties. Federal student loans never have penalties.