Paying 100 extra each month on a loan of 200,000 at 6% a year over 20 years saves 19,144 in interest and repays the loan 28 months sooner.
The extra amount goes straight to repaying the loan, so every later month charges interest on a smaller balance. The loan amount, the rate and the regular payment of 1,432.86 stay the same.
The two schedules side by side
Only the extra payment differs between the two rows:
| Schedule | Regular payment | Extra each month | Months to repay | Total interest |
|---|---|---|---|---|
| Regular payments only | 1,432.86 | None | 240 | 143,887 |
| With the extra payment | 1,432.86 | 100.00 | 212 | 124,743 |
Where the saving comes from
Interest is charged on the balance still owed. Money repaid early stops attracting interest from that month on, and the loan ends sooner because the balance reaches zero before the original term is up.
These figures follow from the stated inputs. A real loan can differ: a lender may apply extra payments differently or charge for repaying early, and the rate can change.