How to use the loan prepayment savings calculator
- Enter your current balance, annual rate, remaining term and total loan term, then choose the repayment type.
- Enter the amount to prepay and the fee rate, and choose whether to shorten the term or lower the monthly payment.
- The interest saved, the estimated fee, the net savings and the monthly payment and remaining term before and after are shown at once.
How it is calculated
An equal-payment (annuity) loan is calculated so the monthly payment is constant. The payment is balance × monthly rate ÷ (1 − (1 + monthly rate)^−remaining months), and total interest is payment × months − balance. An equal-principal loan repays the same principal every month while the interest keeps shrinking; total interest is balance × monthly rate × (months + 1) ÷ 2. A bullet loan pays only interest each month and the principal at maturity, so total interest is balance × monthly rate × months. After a prepayment the loan is recalculated on the smaller balance, and the difference from the earlier total is shown as "interest saved".
For example, take a 100 million KRW equal-payment loan at 4.5% with 240 months left. Prepaying 10 million KRW and keeping the same monthly payment shortens the remaining term a lot and reduces total interest. Enter the same numbers in the calculator to see it yourself.
About prepayment fees
A prepayment fee is what a lender charges when you repay a loan before maturity. It is usually charged only during a set period after the loan starts (for example three years) and is often waived afterward. The fee commonly shrinks the closer you are to maturity, so this calculator multiplies by the share of the term that remains. Some products let you repay up to a yearly limit without a fee, so check the waiver conditions in your contract. Fee rates vary by product and time, so it is more accurate to type in your own rate than to rely on a default.
Things to know about the result
- The calculator assumes the interest rate does not change. Results for variable-rate loans may differ.
- Interest is simplified to monthly steps; daily interest, payment dates and changes to preferential rates are not included.
- If the prepayment is large, first check that you keep enough money for living costs and emergencies.
- Changes in taxes or deductions (such as mortgage interest deductions) are not included.
FAQ
How is the prepayment fee calculated?
Many lenders use "prepaid amount × fee rate × remaining days ÷ total loan days". This calculator uses the same idea simplified to months. The fee rate, the period it applies to and waiver conditions differ by loan, so check your contract and enter them yourself.
Which saves more interest: shortening the term or lowering the payment?
For the same amount repaid, shortening the term usually cuts more total interest because the principal falls faster while the monthly payment stays the same. If your goal is a lighter monthly burden, lowering the payment may still be the better fit.
Is prepaying worth it even with a fee?
It pays off when the interest saved is larger than the fee. The "net savings" line shows that difference. Also consider that your emergency cash shrinks, what the same money could earn elsewhere, and whether another loan with a higher rate should be repaid first.
Notes & limitations
This calculator is for reference only and does not recommend any financial product or repayment method. Actual interest, fees and schedules follow your loan contract and your lender. Consider speaking with your lender or a professional before an important decision.