Full transparency on the math behind every result: the model, its assumptions, what it deliberately leaves out, and the sources we rely on.
Every figure on this site comes from a standard amortization calculation, the same method lenders use to build a repayment schedule. The engine works month by month. For each month it charges interest on the current balance at one twelfth of your annual interest rate, subtracts that interest from your monthly payment, and applies whatever is left to the principal. The balance falls by that principal amount, and the process repeats on the new, lower balance until the loan reaches zero.
To show what overpaying does, the engine runs this calculation twice: once with your normal payment, and once with your extra amount added to every payment. The difference between the two schedules is what you see as months saved and interest avoided. Because the math is deterministic, the same inputs always produce the same result, and you can verify any single month by hand: multiply the balance by the monthly rate to get that month's interest, then subtract it from the payment to see how much goes to principal.
Any payoff estimate has to fix some variables, and we state ours plainly. The model assumes a fixed annual interest rate that does not change over the life of the loan, a consistent monthly payment, and interest that compounds monthly. It assumes every extra amount you enter is applied directly to principal in the month it is paid, and that payments arrive on schedule. These are the conventional assumptions behind a textbook amortization schedule.
We deliberately keep the model simple and pure so the result is easy to understand and check, rather than burying it in inputs most people do not have to hand. The cost of that simplicity is that the figures are a well-grounded estimate, not a lender quote. Where your real loan departs from these assumptions, your statement will differ, and the next section explains the most common reasons why.
A few real-world details sit outside the model. Some loans use daily rather than monthly compounding, which can change the interest slightly. Rounding on your lender's side, the exact day each payment posts, and any fees or escrow amounts bundled into your bill can all move the numbers a little. Variable-rate loans will diverge over time as the rate changes, since the model holds the rate steady.
Two product-specific issues matter most for overpayments. First, some servicers apply anything above the required amount to your next bill rather than to principal, which means the saving never materialises unless you instruct otherwise. Second, a small number of loans carry a prepayment penalty that the model does not know about. We cover both in our guides, because they are the usual reasons a real loan does not match the calculator. Always treat your lender's figures as the ones that count.
The amortization method we use is standard and well documented. For independent explanations of how amortization, interest and annual percentage rate work, the Consumer Financial Protection Bureau (consumerfinance.gov) and Investopedia (investopedia.com) both publish clear, authoritative references that match the approach used here. We point to these rather than ask you to take our word for the math.
Our own guides expand on the practical side: how to make sure extra payments reduce principal, how biweekly schedules sneak in an extra annual payment, and how to weigh overpaying against other uses of your money. The calculator and every guide share the one engine described above, so what you read and what you compute are always consistent. If you ever find a figure that does not look right, our contact page explains how to report it so we can check.