Those of you, who bought a house or a vehicle on a mortgage or loan, know this term “Extra payment” very well and those who don’t know what the heck is an extra payment, here’s some explanation. When you get a mortgage, you agree to pay it back to the bank or loan firm in installments monthly or annually. With an additional amount in form of interest rate, you pay off the principal amount in several years but there is a way you can make this process short or quick. Every year if you arrange some money and pay an extra installment to the bank, it will decrease the installments and the time span and save you a lot of money because with fewer installments, you will save the additional amount of interest rate. It’s a fact that we have to give all the money back to bank that we borrowed but if you pay some extra payments, you will be mortgage free a few years sooner. This extra payment is not due on you and even if you don’t pay the extra installment on time, the bank won’t ask you or demand the money from you because by these extra payments, you are giving him more than he asked for.
The extra payment calculator is used when you want to see calculate the extra payments you want to make every year and the affects of these extra payments on the time span and principal amount. We also use this calculator to check the interest saved on a loan or mortgage due to extra payments. This calculator also shows the reduction in the total number of payments. If you are paying extra payments but you don’t know if you can afford a little bit more or these extra payments won’t even affect the principal amount, there is no mean to do that at all. This is the point where an extra payment calculator comes handy and you see a real picture of figures and amounts.
Many websites offer this calculator free of cost and you just have to enter some amounts and within a few seconds you get the results in front of your eyes. This calculator has number of benefits and advantages over a manual work. While using this calculator, you don’t need to do any calculations by hand or deal with complicated equations but you just need to know your principal amount, rate of interest, number of installments and the extra earning you are getting from business. For example if you pay $1000 installment every month and you have decided to make an extra payment of $2000 every year and the total number of installments will pay off after 120 installments, this calculator shows you that by giving $2000 extra each year, you can decrease the installments down to 100 and that means you also saved the interest rate on these 20 installments.
Here is preview of this Extra Payment Calculator Template,
Uses of an extra payment calculator in our daily lives:
- The most important and frequent use of this calculator is to find out just the right amount of your extra payments. Individuals and businesses use this calculator to calculate the amount of extra installment they can pay every year.
- This extra amount is not due on the borrower so only this person gets all the benefits of this process and the bank or the loan company just get their money a few months early.
- Banks and loan firms use this calculator to see the reduction in the installment months of a customer’s debt.
- Individuals use this calculator to check if it’s better to make the extra payments or should they save the money and after a few years, give in one installment.
Here is download link of this Extra Payment Calculator Template,