You’ll see a difference, based on the extra $100 principal payment.Maybe I'm incorrect in my thinking, but I have a question about prepaying a loan. Take a look at the total interest paid over the life of the loan. Change the principal from $10,000 to $9,900 and run the calculation again. Use the $10,000 figure and calculate your amortization over the remaining term of the loan. Say, for example, that your extra payment reduces your principal from $10,000 to $9,900. Use a calculator to compute the interest you will save if you make extra payments. You can find loan amortization calculators on the Internet.You want to reduce the principal amount for the debt with the highest interest rate. Your extra payment will have the biggest impact on the loan with the highest interest rate. Consider the interest rate on the debts you have outstanding.The faster you’re able to reduce principal, the less total interest you will pay over the loan term. Whenever possible, make extra payments to reduce the principal amount of your loan faster.You can use your knowledge of amortization to manage your personal debts. Since your mortgage loan and many car loans use amortization, you need to understand this concept. Use the concept of amortization to make smart choices about your finances. You can also try an online amortization calculator.monthly payment, interest rate) as this will allow you to quickly visualize how changes will affect each other over the life of the loan. Even better is to set aside a separate set of columns and input your main loan variables (e.g.Once entered correctly, simply drag your equation(s) down through the remaining cells to compute amortization over the life of the loan.A spreadsheet makes the calculations significantly quicker because, if done correctly, you only have to enter a given equation once (or twice, as when you are using the previous month's calculation to fuel all subsequent calculations).
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