How Amortization Affects Loan Interest

Here’s a secret many people don’t realize: the longer the loan term, the more interest you pay overall. Even if monthly payments seem smaller, you end up paying much more in total. This is where amortization helps you see the real cost.

For example:

• Loan A: $10,000 for 3 years at 6% = Total Interest ~$950
• Loan B: $10,000 for 7 years at 6% = Total Interest ~$2,200

So while Loan B has lower monthly payments, it costs you more in the end. This is why using an amortization schedule is so helpful—it tells you the truth behind the numbers.

Why Extra Payments Make a Big Difference

One powerful feature of amortized loans is the ability to make extra payments. Even paying just $50 extra a month toward principal can shave years off your loan and save thousands in interest.

If you use an amortization calculator, you can plug in extra payments and see the magic happen. You’ll be surprised how fast you can become debt-free just by skipping a few lattes and applying that money to your loan instead.