Formula behind the schedule
A standard amortizing loan has one level principal-and-interest payment: payment = P × r(1+r)^n ÷ ((1+r)^n − 1), where r is the annual rate divided by 12 and n is the remaining number of months. Each month begins with interest on the current balance. The scheduled payment pays that interest first; the remainder reduces principal. The extra field is added only after that scheduled payment, so it is treated as principal rather than as an early next instalment.
Worked numbers month by month
With $300,000 at 6.5%, r is 0.0054167 per month. The first month’s interest is $1,625. A roughly $1,896 scheduled payment therefore removes about $271 of principal. Adding $250 removes about $521. The second month’s interest is calculated on roughly $299,479 rather than $299,729. That $1.35 difference is small, but it repeats and grows because every later interest charge uses the smaller balance.
Why an early payment matters more
A $250 payment in month 1 avoids interest for almost the entire remaining term. The same $250 in month 350 has only a few months in which to change interest. This is not a special lender bonus: it follows from the balance being the base for each monthly interest charge. The result reports a payoff month and the difference in simulated interest, which are more informative than simply multiplying $250 by the number of months.
Where the model applies
Use this for a fixed-rate mortgage, auto loan, or personal loan when the servicer accepts extra money as principal. Enter the balance now and the remaining term, not the original amount or original 30-year term. It is useful for comparing a recurring extra payment with keeping cash for another purpose. It does not decide that trade-off; it shows the debt-side arithmetic so the alternative can be compared on the same dates.
What can make a real schedule differ
Adjustable rates, payment holidays, biweekly posting, mortgage insurance, escrow, prepayment penalties, and a servicer that advances the due date instead of reducing principal are outside this schedule. Statements can also round monthly interest to cents, so a final payment may differ slightly. Check the loan agreement for a prepayment instruction and confirm on the next statement that the balance, not merely the next due date, changed.
Input mistakes worth catching
APR belongs in the percentage field as 6.5, not 0.065. A remaining balance is not the property price, and an extra payment is not a replacement for the required payment. A result that pays off later after increasing an extra payment indicates that a field was mixed up. Test one change at a time: first set extra to zero to reproduce the contractual schedule, then add the planned amount.
Different from nearby loan tools
This page creates a full month-by-month payoff simulation with an extra principal amount. A payment calculator answers what the scheduled payment would be for a new loan, while a refinance comparison changes the loan’s rate and fees. No information is sent from the form: the browser discards the scenario when the tab closes. It is an educational estimate, not lending, tax, or financial advice.
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