Loan Payoff Calculator
Find out when a loan will be paid off and how much interest you will pay, how much an extra monthly payment saves, or what payment clears the loan by a target date.
Results
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Quick Answer
Each month the lender adds interest of APR ÷ 12 on the balance, and your payment covers that interest first. A $20,000 loan at 7% with $400 a month takes 5 years and costs $3,715.34 in interest. Paying $100 extra each month cuts it to 3 years 10 months and saves $874.11.
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Table of Contents
- Loan Payoff Calculator
- Quick Answer
- Related Calculators
- How This Loan Payoff Calculator Works
- How to Use the Loan Payoff Calculator
- Loan Payoff Formulas
- Key Terms
- Worked Example
- Real-Life Examples
- Extra Monthly Payment vs Lump Sum
- Extra Payment Savings
- What Makes the Biggest Difference
- Common Mistakes to Avoid
- Frequently Asked Questions
- References & Sources
How This Loan Payoff Calculator Works
Whether it is a car loan, a personal loan or a student loan, the same question comes up: when will it be gone, and is paying extra worth it? Enter the current balance, the interest rate and your monthly payment, plus any extra you can add. The calculator steps through the loan month by month and shows the payoff time and interest with and without the extra payment, so you can see exactly what it saves. Switch to the second mode to find the payment that clears the loan by a target date.
Quick explanation: extra payments go straight to principal, so every later month charges interest on a smaller balance.
- Monthly interest: balance × APR ÷ 12.
- Principal paid: payment − interest.
- Payoff: repeat until the balance reaches zero.
How to Use the Loan Payoff Calculator
- Choose payoff time from your payment, or the payment needed for a target.
- Enter the loan balance and the interest rate (APR).
- Enter your monthly payment and any extra payment, or the number of months.
- Press Calculate.
- Compare payoff time and interest with and without the extra payment.
Loan Payoff Formulas
- Monthly rate: r = APR ÷ 12 ÷ 100
- Interest this month: I = balance × r
- New balance: balance + I − payment (the last payment is just what is left)
- Number of payments: n = −ln(1 − r × B ÷ P) ÷ ln(1 + r), rounded up
- Payment for a target: P = B × r ÷ (1 − (1 + r)−n)
Key Terms
- Principal: the amount you still owe, not counting interest.
- APR: the yearly interest rate; monthly interest uses APR ÷ 12.
- Amortization: paying a loan down with regular payments that cover interest and principal.
- Extra payment: money paid on top of the required payment, applied to principal.
- Prepayment penalty: a fee some lenders charge for paying a loan off early.
Worked Example
You owe $10,000 at 12% APR and pay $300 a month. What if you pay $400?
- Monthly rate: 12 ÷ 12 = 1%, so the first month’s interest is $100.00
- At $300 a month: 3 years 5 months and $2,224.95 in interest
- At $400 a month: 2 years 5 months and $1,564.88 in interest
- The extra $100 saves 1 year and $660.07
To clear $15,000 at 9% in 36 months instead, you would need $477.00 a month.
Real-Life Examples
- Car loans: see how much sooner an extra $50 a month frees up your budget.
- Personal loans: check the true cost before taking on new debt.
- Student loans: plan a payoff date and the payment it needs.
- Debt planning: compare which loan to put extra money toward.
Extra Monthly Payment vs Lump Sum
- Extra monthly payment: steady progress that is easy to budget.
- Lump sum: cuts more interest at once if you have the cash now.
- Either way: the money goes to principal, so it saves interest at the loan’s rate.
Extra Payment Savings
Example: $20,000 balance, 7% APR, $400 regular monthly payment.
| Extra per month | Payoff time | Total interest | Interest saved |
|---|---|---|---|
| $0 | 5 years | $3,715.34 | $0.00 |
| $25 | 4 years 8 months | $3,448.72 | $266.62 |
| $50 | 4 years 4 months | $3,218.70 | $496.65 |
| $100 | 3 years 10 months | $2,841.23 | $874.11 |
| $200 | 3 years 2 months | $2,305.15 | $1,410.20 |
| $300 | 2 years 8 months | $1,942.80 | $1,772.55 |
What Makes the Biggest Difference
The interest rate and how early you pay extra matter most. On a high-rate loan, even a small extra payment saves a lot, because most of each regular payment is going to interest. Early in a loan the balance is highest, so extra money paid then avoids interest for the most months. A one-time lump sum works the same way: it removes that much principal and every later month’s interest shrinks.
Before paying extra, check that your lender applies it to principal and that there is no prepayment penalty. It also usually makes sense to keep an emergency fund and to pay off higher-rate debt, such as credit cards, first. If the payment barely covers the interest, the loan will take a very long time to clear; the calculator warns you when the payment does not cover a month’s interest at all.
Common Mistakes to Avoid
- Not telling the lender to apply extra to principal. Some apply it to the next payment instead.
- Using the original loan amount. Enter today’s balance.
- Ignoring fees. Check for prepayment penalties first.
- Paying extra on low-rate debt first. Higher-rate debt usually saves more.
- Draining savings. Keep an emergency fund before paying ahead.
Frequently Asked Questions
Each month add balance × APR ÷ 12 in interest and subtract your payment; count the months until the balance is zero.
On $20,000 at 7% with $400 a month, $100 extra saves $874.11 and 1 year 2 months.
Yes. Extra goes to principal, so later interest is charged on a smaller balance.
For $15,000 at 9%, about $477.00 a month for 36 months.
A lump sum saves a bit more if paid now; monthly extra is easier to keep up. Both cut interest.
Early on most of the payment is interest; the share going to principal grows each month.
Many do, but some charge daily interest, so payoff quotes can differ slightly.
Usually yes; check the contract for prepayment penalties.
Compare the loan rate with the after-tax return you expect and keep an emergency fund.
References & Sources
| Source | Used For | Link |
|---|---|---|
| Consumer Financial Protection Bureau, What is amortization? | How fixed payments split into interest and principal. | https://www.consumerfinance.gov/ask-cfpb/what-is-amortization-and-how-could-it-affect-my-auto-loan-en-873/ |
| Consumer Financial Protection Bureau, What is a prepayment penalty? | Fees some lenders charge for early payoff. | https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/ |