CalculateY
Quick Answer
A $25,000 loan at 7% with $400 monthly payments takes approximately 78 months to pay off, with estimated total interest of approximately $6,157. Adding $100 extra per month saves an estimated $1,714 in interest.
Common Examples
| Input | Result |
|---|---|
| $25,000 at 7%, $400/month, no extra | Estimated 78 months, $6,157 total interest |
| $25,000 at 7%, $400/month, $100 extra | Estimated 58 months, $4,443 total interest |
| $15,000 at 5%, $300/month, no extra | Estimated 56 months, $1,669 total interest |
| $50,000 at 6.5%, $600/month, $200 extra | Estimated 72 months, $9,131 total interest |
| $10,000 at 8%, $250/month, $50 extra | Estimated 37 months, $1,177 total interest |
How It Works
This calculator uses a month-by-month amortization simulation rather than a single closed-form formula. Each month, it applies the following steps:
- Calculate interest: Interest = Remaining Balance x (Annual Rate / 12 / 100)
- Subtract payment: New Balance = Remaining Balance + Interest - (Monthly Payment + Extra Payment)
- Repeat until the balance reaches zero
The simulation runs twice: once with the standard monthly payment alone, and once with the extra payment added. The difference between the two runs reveals the estimated time saved and interest saved.
If the monthly payment does not exceed the first month’s interest charge, the loan balance will never decrease. The calculator detects this condition and displays a warning.
Worked Example
For a $25,000 balance at 7% annual interest with a $400 monthly payment:
Month 1: Interest = $25,000 x (0.07 / 12) = $145.83. Principal paid = $400 - $145.83 = $254.17. New balance = $24,745.83.
Month 2: Interest = $24,745.83 x 0.005833 = $144.35. Principal paid = $400 - $144.35 = $255.65. New balance = $24,490.18.
This process continues for approximately 78 months until the balance reaches zero. Estimated total paid is approximately $31,157, with approximately $6,157 going to interest.
With an extra $100/month ($500 total), the loan pays off in approximately 58 months instead, saving roughly 20 months and an estimated $1,714 in interest. The extra payment reduces the balance faster, meaning less interest accrues in every subsequent month.