Share your insights or perspective on the financial matter presented in the input.

Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan?
If you take a loan, you make a contract with your lender, let's call them "bank" (even if it might not be a real bank).  This loan contract contains an agreed-upon way of paying back the loan.  Both sides agreed upon these conditions.  Any change of it (like paying back early) needs the consent of both sides.  So, in general, no, you cannot just pay back everything earlier unless the other side accepts this change of the contract. Consider it from the bank's point of view:  They want to earn money by getting the interest you have to pay when you pay back everything nice and slowly.  It is their business.  They plan on these expected revenues etc. So if, for whatever reason, you have to pay back the whole remaining loan at once, you create a revenue loss for the bank and are liable for this financial damage.  In German the term for this is "Vorfälligkeitsentschädigung" which translates to "prepayment penalty" or "acceleration fee".  You just have to pay it, so in the end you come out like if you were paying back the loan in the agreed-upon fashion. However, many loan contracts contain the option to pay back early at specific points in time in specific amounts and under specific conditions.