Overview

When interest rates are high, advancing the payment dates has the effect of shortening the term by several months.

Example

On January 1st, 2024, you borrowed $10,000 which is to be paid of in 120 monthly installments starting on February 1st, 2024. If interest is at 8 % compounded monthly, the monthly payment is $121.33.

What would happen if you advance the payment dates and pay on the 5th of each month, starting on January 5th, 2024?

Set up the following cashflow or select the Loan - Changing payment dates example in the Help > Examples menu.

Date	Type	Value	Occurs	#	Change	Step	Comment
1-1-2024	outflow	1,000	once				Loan
2-1-2024	unknown	1	monthly	120	no change		Payment

Check Auto update to calculate the payment: 121.33.

First, uncheck Auto update so that the x Value stays 121.33.
Then change the start date for the series of payments to January 5th.

If you forgot to uncheck Auto update before changing the payment dates, InterestThing will automatically recalculate a new x Value, entering 121.33 in the x Value field will uncheck Auto update.

To see the effect of making payments sooner, switch to the Schedule tab and scroll to the bottom.

You'll see that the balance now becomes positive on November 5th, 2033, instead of January 1st, 2034: advancing the payment date to the 5th reduces the term by two months.

To see the effect of rounding up the payment to 125.00, change the amount in the payment event: a lightly higher payment additionally shortens the term so that the loan is now paid off on June 5th, 2033.

Back to Examples