Calculate Lower Interest Rate & Prepay to Reduce Interest
Understanding and calculating lower interest rates, along with prepayments, can significantly reduce the total interest paid over the life of a loan. This calculator helps you understand the impact of these factors on your loan.
- Enter your loan amount, interest rate, loan term, and monthly payment.
- Click the “Calculate” button.
- View your results and chart below the calculator.
The calculator uses the mortgage formula to calculate the total interest paid and the remaining balance after prepayments.
| Interest Rate | Total Interest Paid (30-year loan, $200,000) |
|---|---|
| 3% | $186,440 |
| 4% | $240,240 |
| 5% | $300,000 |
| Monthly Prepayment | Total Interest Paid (30-year loan, $200,000, 4% interest) | Loan Term (years) |
|---|---|---|
| $200 | $238,704 | 29.8 |
| $500 | $227,154 | 28.7 |
| $1,000 | $205,604 | 27.6 |
- Consider refinancing to a lower interest rate.
- Make extra payments towards your principal to reduce interest.
- Be mindful of prepayment penalties.
What is the difference between interest rate and APR?
Interest rate is the cost of borrowing money, while APR (Annual Percentage Rate) includes additional fees and costs associated with the loan.
For more information, see the CFPB’s guide on APR.