Early loan payments are mostly interest. On a $20,000, 60-month loan at 12%, after 12 payments you have paid $5,339 but still owe $16,894, because only $3,106 of it went to principal.
Balance by month
| After | Balance remaining | Interest paid so far | Principal repaid |
|---|---|---|---|
| 12 months | $16,894 | $2,233 | $3,106 |
| 24 months | $13,394 | $4,072 | $6,606 |
| 36 months | $9,451 | $5,467 | $10,549 |
| 48 months | $5,007 | $6,362 | $14,993 |
This matters if you may pay off the loan early. Interest is front-loaded, so a payoff in year 2 still leaves you having paid most of the interest you would have paid on a standard schedule.
What we assumed
- Fixed APR and equal monthly payments; no late fees.
- Origination fees are zero unless the post says otherwise.
Related calculators: Personal Loan Calculator, Mortgage Calculator.
Questions people ask
Why is so much of early payments interest?
Interest is charged on the remaining balance, which is highest at the start.
Estimates for general education, not financial, tax or legal advice. Real results depend on your lender, employer, tax situation and location. See the disclaimer.