Extra monthly payments spread the additional commitment over time. A lump sum reduces the balance immediately. Which saves more depends on the amounts, the rate and when the payments happen. The following example makes those differences visible.
Four repayment scenarios
Assume a new $100,000 loan at a fixed 6% annual interest rate for 30 years, with monthly interest and month-end payments. The scheduled payment is about $599.55. We keep that payment unchanged after a lump sum.
| Extra principal payment | Payoff months | Total interest | Interest saved |
|---|---|---|---|
| None | 360 | $115,838.19 | $0 |
| $100 each month | 252 | $75,937.94 | $39,900.25 |
| $10,000 immediately | 279 | $76,916.96 | $38,921.23 |
| Both | 207 | $54,576.69 | $61,261.50 |
Why this does not prove monthly payments are better
The two extra-payment amounts are not equal. Paying $100 more over many months commits more than $10,000 in additional cash over the life of this example. The table compares two possible plans, not an experiment holding the total extra contribution constant.
Timing matters too. Money applied to principal earlier reduces the balance used to calculate later interest. A lump sum paid several years from now would produce a different result; this calculator applies it at the start.
How to reproduce the figures
- Open the extra payment calculator.
- Set the principal to 100000, annual rate to 6 and term to 30 years.
- Enter 100 as the extra monthly amount and 10000 as the lump sum.
- Compare all four scenarios in the report.
Calculate your own extra-payment scenarios.
Questions the example does not answer
The model excludes prepayment penalties, tax effects and investment alternatives. It also does not test whether using a lump sum would leave enough cash for other expenses. Check how your lender applies extra payments and whether it changes the scheduled payment or the loan term. The report assumes an unchanged scheduled payment.
For an existing loan, the entered balance, rate and remaining term must reproduce the scheduled payment for a close comparison. Rounding and payment dates can cause a lender’s schedule to differ.
Comparing new borrowing instead? Compare loan offers and fees.
By MoneyMaths. Example calculations checked 22 September 2026. Educational scenarios; see our formulas and limitations.