Understanding the Real Cost of Borrowing
Amortization · Extra Payments · 15 vs 30 Years
A low monthly payment doesn't mean a loan is affordable. It just means the pain is stretched out over a longer period, quietly racking up thousands in interest behind the scenes. Our tools expose these hidden costs.
What Is an Amortization Schedule?
An amortization schedule is a month-by-month table showing every single payment split into its interest and principal components, plus your remaining loan balance. In Month 1 of a 30-year mortgage, your payment is almost entirely interest. In Month 360, it is almost entirely principal. This is not the bank cheating you; it's just math.
The Power of Extra Payments
Paying just $200 extra per month on a $300,000 mortgage at 7% saves approximately $74,000 in interest and cuts nearly 7 years off the loan. Extra principal payments compound dramatically.
Fixed vs Variable Rate Loans in 2026
At current rates, choose fixed when you need budgeting certainty, are taking a loan term of 15+ years, or believe rates will stay high. Choose variable if you plan to sell or refinance within 3–5 years and can absorb potential payment increases.
The 72-Month Car Loan Trap
72 and 84-month car loans are increasingly common, lowering monthly payments but costing 15–25% more in total interest than a standard 48-month loan. Furthermore, they keep you "underwater" (owing more than the car's value) for the first 2-3 years. Never take an auto loan longer than 60 months.
Checking Affordability
If you want to know if you can afford the rent or mortgage in your city on your current salary, try our Rent Affordability Calculator to ensure you aren't spreading your finances too thin.