A loan payment is the fixed amount you pay each month to your lender, which includes both principal repayment and interest charges. Most consumer loans use an amortization schedule where early payments are heavily weighted toward interest, while later payments pay down more principal.

The standard formula for a fixed monthly payment is: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments. This formula ensures your balance reaches zero at the end of the term.

Making extra payments toward your principal can dramatically reduce both the total interest you pay and the time it takes to become debt-free. Even a small additional monthly payment of $50 to $100 can shave years off a long-term loan and save thousands in interest charges. Always confirm with your lender that extra payments are applied to principal, not future payments.