Where Your Loan Payments Actually Go

A loan is the mirror image of a bond: instead of being owed a future payout, you owe one. You borrow a lump sum today and pay it back in fixed monthly chunks. If you pay more than the required payment, you can pay off the loan faster and save on interest. The below interactive can help see how that works, how much less interest you pay by making extra payments (earlier or later), and how the loan balance changes over time.

Tip: click the chart to drop a one-time payment and type its amount; drag it to move it in time; click it again to change the amount (× or 0 removes it). Click a year on the bottom axis to anchor the timeline to a real date.

Principal (what you borrowed) Interest (the cost)

Standard payments

With extra payments

Monthly payment: $333/mo. Interest saved by paying extra: $0 —.

Loan amount: $30,000 Interest rate (APR): 6.0% Term: 10 years Extra payment: $100/mo Start extra payments: now

Try:

Notice the timing: the same extra dollars wipe out more interest the earlier you pay them, because they stop interest from piling up on that balance for longer. Slide “Start extra payments” later (or hit “start at year 5”) and watch your savings shrink.