Extra payments (prepayment)
Also called: Prepayment, Principal-only payment
Paying more than your scheduled loan payment so the extra goes straight to principal, shortening the loan and cutting total interest paid.
Every extra dollar reduces the balance that interest is charged on, so the savings compound over the remaining term. Extra payments made early in a loan save the most.
Tell your servicer to apply the extra amount to principal, and check that your loan has no prepayment penalty (rare on today's mortgages but still found on some personal and auto loans). Compare the guaranteed "return" — your loan's interest rate — with what that money could earn elsewhere.
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.