Loan Payoff Calculator

Enter your loan balance and rate, plus either the remaining term or your monthly payment, then add an extra monthly or one-time payment to see your new payoff date and the interest you'll save.

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How loan payoff works

Every month your lender charges interest on the remaining balance first; only the rest of your payment reduces what you owe. Anything you pay beyond the required amount goes straight to principal — and once a dollar of principal is gone, it never generates interest again, for the entire remaining life of the loan. That's the whole trick: extra payments don't just shorten the loan, they retroactively cancel all the future interest those dollars would have cost. This calculator simulates your loan month by month, with and without your extra payments, and shows the difference in time and dollars. It works for auto loans, personal loans, and student loans alike; for a brand-new loan you're still shopping, use the loan calculator.

The formula

M = P × r(1 + r)n ÷ ((1 + r)n − 1)   and   n = −ln(1 − rP ÷ M) ÷ ln(1 + r)

M is the monthly payment, P the current balance, r the monthly rate (annual rate ÷ 12 ÷ 100), and n the number of months. Enter your term and the first formula finds your payment; enter your payment and the second finds your remaining months. The payoff comparison is then a month-by-month simulation: each month the balance grows by balance × r, shrinks by your payment plus extras, and repeats until it hits zero.

Worked example

A $25,000 auto loan at 7% with 5 years remaining has a payment of $495.03 and would cost $4,701.80 in interest.

Add $100 extra per month: the loan pays off in 4 years, 1 month — 11 months sooner — with total interest of $3,762.80. That's $938.99 saved, roughly two of the original payments, just for rounding the payment up.

Pay the highest rate first

Before throwing extra money at any one loan, line up all your debts by interest rate. A dollar of extra principal earns a guaranteed return equal to that debt's rate — so a credit card at 24% pays you four times what a 6% car loan does. This highest-rate-first ordering is the debt avalanche, and it's mathematically unbeatable. Its rival, the debt snowball (smallest balance first), costs a bit more in interest but hands you quick wins that keep people motivated — the best method is honestly whichever one you'll stick with. Either way, prepaying a low-rate loan while carrying card debt is paying down the wrong end of the pile.

Two fine-print checks before you prepay

Prepayment penalties: most auto and federal student loans have none, but some personal loans and older mortgages charge a fee for early payoff. One line in your loan agreement (search for "prepayment") settles it before you send a dime.

Federal student loans: tell your servicer, in writing or via the payment portal, to apply extra amounts to principal on your highest-rate loan — and not to advance your due date. By default many servicers treat extra money as "paying ahead," marking future bills as satisfied; the temptation to skip those months then quietly erases the interest savings you were trying to create. Also confirm the extra isn't spread thinly across all loans in the group when it should be concentrated on the most expensive one.

Frequently asked questions

How much faster will extra payments pay off my loan?

It scales with the loan. On a $25,000 auto loan at 7% with 5 years left, an extra $100 a month pays it off 11 months sooner and saves about $939 in interest. On bigger, longer loans the same $100 saves far more, because each extra dollar cancels interest for every remaining month of the term.

Which loan should I pay off first?

Mathematically, the one with the highest interest rate — that's the debt avalanche, and every extra dollar there earns the biggest guaranteed return. A 24% credit card beats a 6% car loan every time. The debt snowball (smallest balance first) costs slightly more but delivers faster wins; pick whichever ordering you'll actually stick with.

Do extra payments lower my monthly payment?

No — for a standard installment loan the required payment stays the same. Extra payments shorten the loan instead: you make fewer payments overall and pay less total interest. If you want a lower monthly bill, that's refinancing (or, for mortgages, a recast), which is a different tool.

Is there a penalty for paying off a loan early?

Usually not: federal student loans and most auto loans have no prepayment penalty by law or by convention. Some personal loans and older mortgages do charge one, though, so search your loan agreement for "prepayment" before sending a large lump sum. Even when a penalty exists, the interest saved often still comes out ahead — run both numbers.

How do I make extra payments on federal student loans?

Instruct your servicer to apply the extra to principal on your highest-rate loan and not to advance your due date. Many servicers default to treating extra money as paying your next bill early, which invites you to skip future payments and quietly undoes the interest savings. A standing instruction in your account settings or a note with each payment fixes it.

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