Extra payments can save serious interest. Learn how to do it safely and when other priorities come first.
Why extra payments work
Interest is charged on your remaining balance. Every extra dollar that reduces the balance means less interest in every future month.
A real example
A $20,000 loan at 8% over 60 months has a payment near $406 and about $4,330 of interest. Adding $100 a month clears it in roughly 46 months and saves about $1,040 and 14 months.
Check before you start
Look for prepayment penalties in your agreement and ask how extra payments are applied. You want them to reduce principal, not just prepay the next instalment.
Other ways to speed it up
Make biweekly payments, round your payment up, or add windfalls like bonuses and tax refunds.
When to wait
Build a basic emergency fund first, and clear higher-rate debts before low-rate ones.
Plan it
Test amounts in the early loan payoff calculator.
General information only, not financial, credit or legal advice. We do not offer or arrange loans. Rules and rates differ by country and lender.