Additional principal payment

If you want to pay off a loan early, an additional principal payment is the way to do it. In amortized loans, such as most mortgages and auto loans, any amount borrowers remit above the required monthly minimum payment is used to pay down the principal on the loan. Making at least one extra payment a year can cut the length of a loan by as much as a quarter and sharply reduce the total interest paid.

Most Recent

Should You Pay Extra on Your Mortgage?

Paying down debt is always a good idea. It will reduce the amount you pay in interest and shorten the length of your loan. But it might not be the wisest use of your money until you've done these three things.