Does paying extra always save interest?

Yes, as long as the extra payment goes to the principal and your lender has no prepayment penalty. Interest is charged on what you still owe, so every dollar that lowers the balance lowers every interest charge that follows.

Is it better to pay extra monthly or in one lump sum?

Both help, and the earlier the money lands, the more it saves. A lump sum today removes interest on that amount for the whole remaining term; a monthly extra builds the same effect gradually and is easier to sustain.

Debt payoff

What an extra $200 a month really does to a loan

September 5, 2026

Your Money — control your money. Don't let it control you.

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Adding $200 a month to a loan payment sounds small. Over a full term it is not: on a $100,000 balance at 7.5% APR, it takes the payoff from twelve years and seven months down to nine years and seven months, and cuts the interest bill from $54,704 to $40,283.

Why the saving is so large

Interest is charged on what you still owe. Every extra dollar you put in today removes not just that dollar from the balance, but every future interest charge that dollar would have collected. That is why the same $200 saves far more in year one than in year nine — and why starting early matters more than the size of the extra payment.

Check it against your own numbers

The example above is one balance at one rate. Yours will be different, and the only number worth planning around is your own.

What this looks like in the app

Loan Navigator runs the same calculation on your real balance and shows the payoff date, the total interest, and what changes when you add an extra payment. It is included with Your Money Pro.

Frequently asked questions

Does paying extra always save interest?: Yes, as long as the extra payment goes to the principal and your lender has no prepayment penalty. Interest is charged on what you still owe, so every dollar that lowers the balance lowers every interest charge that follows.
Is it better to pay extra monthly or in one lump sum?: Both help, and the earlier the money lands, the more it saves. A lump sum today removes interest on that amount for the whole remaining term; a monthly extra builds the same effect gradually and is easier to sustain.