The whole story, as text
How much does paying $100 extra a month save on a personal loan?
$100 extra a month, 48 payments left. You owe $17,289 at 18% and pay $508 a month. How much interest does the extra $100 save?
The answer
$1,667. And the loan ends 10 months early: 38 payments instead of 48.
Why
On a simple-interest loan, extra money applied to principal reduces the balance immediately, so next month's interest is smaller. $259 interest, $349 off the loan. The extra is not spent. It is the same principal paid sooner, with the interest on it never charged. In all: $7,089 of interest without the extra. $5,422 with it.
One move
Make sure the extra goes to principal. Regular payment: 48 months, $7,089 interest. $100 extra: 38 months, $5,422 interest. $1,667 saved. Debt-free 10 months sooner. Some lenders apply extra money to next month's payment instead. Tell them in writing: apply to principal.
On a precomputed loan the arithmetic is different: extra payments do not reduce the finance charge the same way. See the precomputed story.
Yours
Consolidate or pay faster? runs these numbers for any loan. Nothing you enter leaves your browser.
The longer read
On a simple-interest loan an extra payment reduces the principal, and next month’s interest is charged on the smaller balance. The saving compounds: less interest means more of each regular payment goes to principal too. The effect is larger than most people expect, and larger the higher the rate.
A worked example
You owe $17,289.14 at 18% and your payment is $507.87, with 48 payments left.
| Line | Regular payment only | $100.00 extra a month |
|---|---|---|
| Monthly payment | $507.87 | $607.87 |
| Paid off in | 48 months | 38 months |
| Interest from today | $7,088.51 | $5,421.51 |
The extra $100.00 saves $1,667.00 in interest and ends the loan ten months early. You pay $100.00 more a month for 38 months, about $3,800 in total, but $1,667 of that is interest you never owe; the rest is simply the same principal paid sooner.
Make sure the extra does what you intend
- Ask that it be applied to principal. Some lenders treat an overpayment as an early payment of next month’s instalment, which changes nothing about the interest. A note with the payment, or an online option to apply to principal, settles it.
- Precomputed loans do not work this way. If the interest was added at the start, extra payments shorten the loan but the saving is only the rebate of unearned interest. Check which kind you have.
- A prepayment penalty can apply to extra payments on some contracts, usually only early in the term.
Questions to ask your lender
- If I pay extra, is it applied to principal or held as a prepayment of the next instalment?
- Is there a penalty for paying more than the scheduled amount?
- Can I set a standing extra amount on autopay?
- Is this loan simple interest or precomputed?
See it with your own numbers
Enter the loan as one debt in Consolidate or pay faster?, with the extra amount, and it shows the months and interest with and without it. Several debts? Enter them all and it works out the best order too.
Related: Why is my balance still so high after 12 payments?. Glossary: principal, amortization.
Educational tool, not advice. Your lender’s statement is the authoritative figure.
Written and reviewed by Riverbend Crossroads Digital LLC, Sunday, September 6, 2026. Figures from the Show Real Cost engine, computed exactly and shown to the cent. Educational, not advice; your lender's disclosures are the authoritative figures. How we calculate · Corrections.