1. What is a Loan Lump Sum Calculator?

Definition: This calculator determines the new loan balance after making a lump sum payment.

Purpose: It helps borrowers understand how a lump sum payment affects their remaining loan balance.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• New Balance — Remaining loan amount after lump sum payment ($)
• Balance — Current loan amount before payment ($)
• Lump — One-time payment amount ($)

Explanation: The lump sum payment is subtracted directly from the current loan balance.

3. Importance of Lump Sum Payments

Details: Lump sum payments can significantly reduce loan terms and interest costs by decreasing the principal balance.

4. Using the Calculator

Tips: Enter your current loan balance and planned lump sum payment. The lump sum must be ≤ current balance.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for interest savings?
A: No, this shows only principal reduction. For interest impact, use an amortization calculator.

Q2: Can I make multiple lump sum payments?
A: Yes, you can use the new balance result as input for subsequent calculations.

Q3: Are there typically fees for lump sum payments?
A: Some loans have prepayment penalties - check your loan terms.

Q4: How does this differ from regular payments?
A: Lump sums are extra payments applied directly to principal beyond scheduled payments.

Q5: Will this change my monthly payment amount?
A: Usually no (unless recast), but more of each payment will go toward principal.