1. What is a Lump Sum Principal Payment Calculator?

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

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 payment ($)
• Principal — Current loan balance before payment ($)
• Lump Sum — Amount being paid toward principal ($)

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

3. Importance of Lump Sum Principal Payments

Details: Making lump sum payments reduces your principal faster, which can save you money on interest and shorten your loan term.

4. Using the Calculator

Tips: Enter your current principal balance and the lump sum amount you plan to pay. The lump sum cannot exceed the principal.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for interest?
A: No, this calculates only the principal reduction. For full amortization including interest, use our Loan Calculator.

Q2: What's the benefit of lump sum payments?
A: They reduce your principal faster, leading to less interest paid over the life of the loan.

Q3: Can I make multiple lump sum payments?
A: Yes, but you would need to recalculate after each payment using the new balance.

Q4: Will this affect my monthly payment amount?
A: Typically no (unless you have a recast option), but it will reduce the number of payments needed.

Q5: Are there penalties for lump sum payments?
A: Some loans have prepayment penalties - check your loan terms first.