Loan Calculator
Payment, total interest and full schedule.
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Questions
Why is so much of my early payment interest?
Because interest is charged on the balance outstanding, and the balance is highest at the start. On a five-year loan at 8.5%, the first payment might be 35% interest and the last under 1%. That shape is why paying extra early is worth far more than paying extra late — every dollar of principal you remove stops accruing interest for the whole remaining term.
How much do extra payments really save?
An extra payment goes entirely to principal, so the return equals the loan rate — guaranteed and tax-free. Adding $100 a month to a $25,000 loan at 8.5% typically clears it more than a year early and saves well over $1,000. The calculator shows both figures once you enter an extra amount.
Are there catches with paying extra?
Two. Some loans carry prepayment penalties, particularly fixed-rate ones — check the agreement. And make sure the lender applies the extra to principal rather than treating it as an early payment of next month's instalment; with some lenders that requires asking explicitly, and the difference matters.
Does this work for mortgages?
No. This uses monthly compounding, which is correct for personal loans, car loans and lines of credit in Canada. Mortgages are the exception — the Interest Act requires fixed-rate mortgages to compound semi-annually, not in advance, which makes the effective monthly rate slightly lower. Use the Canadian mortgage calculator for those.
Should I compare the interest rate or the APR?
The APR. It folds in mandatory fees, so a 6.9% loan with a $500 origination fee can cost more than a 7.4% loan with none. Also watch for loan insurance bundled into the payment — it is often optional despite how it is presented — and for a longer term being offered as a way to reduce the payment rather than the cost.
About loan calculator
Where each payment actually goes
Every payment is split between interest and principal, but not evenly. Interest is charged on the balance outstanding, so early payments are mostly interest and late ones are mostly principal. On a five-year loan at 8.5%, the first payment might be 35% interest and the last under 1%.
That shape is why paying extra early is worth so much more than paying extra late. Every dollar of principal you remove stops accruing interest for the entire remaining term.
Extra payments are the highest-return move available
An extra payment goes entirely to principal. Paying an additional $100 a month on a $25,000 loan at 8.5% typically clears it more than a year early and saves well over $1,000 in interest — a guaranteed, tax-free return equal to the loan rate.
Two things to check before you do it. Some loans carry prepayment penalties, especially fixed-rate ones. And make sure the lender applies the extra to principalrather than treating it as an early payment of next month’s instalment; with some lenders that requires asking explicitly.
Payment frequency is a quiet saving
Switching from monthly to weekly payments reduces total interest slightly, because the balance falls sooner within each month. The effect is small on its own. The much larger effect comes from accelerated schedules, where the weekly payment is a quarter of the monthly one — that adds up to thirteen monthly payments a year instead of twelve, and the extra one goes almost entirely to principal.
Canadian loans compound monthly — mortgages do not
Personal loans, car loans and lines of credit in Canada compound monthly, which is what this calculator uses. Mortgages are the exception: the Interest Act requires fixed-rate mortgages to be compounded semi-annually, not in advance, which makes the effective monthly rate slightly lower. Use the mortgage calculator for those — this one would overstate the payment.
What the rate does not tell you
Compare the APR rather than the interest rate. APR folds in mandatory fees, so a 6.9% loan with a $500 origination fee may cost more than a 7.4% loan with none. Watch for loan insurance bundled into the payment, which is often optional despite how it is presented, and for a longer term being offered as a way to reduce the payment — stretching a car loan from five years to eight cuts the payment by roughly a third and increases total interest by roughly two thirds.
Related
Work out a vehicle purchase including sales tax with the car loan calculator, or browse the other financial calculators.