Loans, and paying them down faster
What a loan really costs, and what putting more against it would buy.
A loan here is more than a payment that repeats. Given the amount borrowed, the rate and the term, the app builds the full amortization — every payment from the first to the last, split into what it costs you in interest and what it actually removes from the debt.
Enter the rate the way the lender quotes it. Canadian mortgages are quoted with semi-annual compounding regardless of how often they are paid; there is a switch for that, and it makes the payment slightly lower than dividing the rate by twelve would suggest.
Paying extra#
Pay extra, on any loan, compares two futures: the one your terms describe, and the one more money buys. It shows the interest saved and how much sooner the debt ends before anything is committed.
Two kinds of extra, and they behave differently:
- More on every payment. A standing change. It starts on the day you apply it, so what you paid last year is left as it was.
- A one-time amount. Recorded on its date, and — if the loan is paid from an account here — taken out of that account as well, because it really did leave.
