In short: Before you sign for a car, a personal loan or any financed purchase, two numbers decide everything: what leaves your account every month, and what the loan costs you in total.
Updated August 15, 2026, after a fresh review, with updated visuals and links.
The calculator below gives you both instantly. Underneath, the math behind it and the moves that shrink the interest number.
The math banks use
A fixed-rate loan spreads repayment evenly: each monthly payment covers that month's interest plus some principal. Early payments are mostly interest; late payments are mostly principal.
A $20,000 loan at 8.5% over 5 years costs about $410 per month and roughly $4,620 in total interest. Stretching the same loan to 7 years drops the payment to about $317 but raises total interest past $6,600. Shorter is cheaper overall, longer is gentler monthly.
The rate matters more than most people feel: dropping that loan from 8.5% to 6.5% saves about $1,100 in interest over five years.
Worth remembering
- One extra payment a year, applied to principal, pulls the finish line months closer on long loans.
- Get prequalified with two or three lenders before shopping: the rate spread between them is usually bigger than people expect.
Frequently asked
Does this work for mortgages?
The monthly principal-and-interest calculation is identical; mortgages add taxes and insurance on top, which this tool intentionally leaves out so you see the loan itself.
Why is most of my early payment interest?
Interest each month is computed on the remaining balance, which is at its biggest at the start. As principal shrinks, the interest share shrinks with it.
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