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Supacase's avatar

How to calculate how paying extra principle on a loan changes payoff date?

Asked by Supacase (14563points) March 9th, 2011

This is about my car loan. I know that a portion of each payment goes toward interest and the remainder goes toward the principle.

I want to pay an additional $200 per month, but how do I figure out how much that will decrease the length of the loan? Do I just knock an additional $200 off the principle month by month until I figure it out (this sounds tedious, is there a program online that will help? Similar to an amortization schedule.) or do I need to somehow account for interest as well?

Me + math & finances = confusion

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7 Answers

optimisticpessimist's avatar

link for a loan calculator. You can add extra payments in the second section.

YARNLADY's avatar

Be sure to consider the type of loan you have. Car loans which include the “Rule of 78” charge a set amount of interest regardless of when you pay them off.

optimisticpessimist's avatar

@YARNLADY I guess I have been lucky with my car loans and never had that. Thank you for the info.

BBSDTfamily's avatar

The calculator link that @optimisticpessimist gave you is the best one I’ve found too and very easy to use

gailcalled's avatar

(Psst. You mean “principal.”.)

Supacase's avatar

Thanks, GC. I knew that. Ugh. I kept telling myself school = princi“pal” but my brain dinged every time I wrote principle… I should have payed attention to it!

Supacase's avatar

@optimisticpessimist Thank you! That is exactly what I needed.

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