About the Loan Payoff Calculator
This loan payoff calculator shows what happens when you pay more than the minimum on an existing loan. Enter your current balance, interest rate and the months left on the loan, then add an extra monthly amount, a one-time lump sum, or both. It compares your original schedule with the accelerated one and reports the months saved, the new payoff time and the interest you avoid.
It works for car loans, personal loans, student loans, mortgages and other fixed-rate installment debt. Use it to decide how much extra to pay each month, to see whether a tax refund or bonus is worth putting toward a loan, or to set a debt-free target date.
The calculator assumes your regular payment stays the same, extra money goes straight to principal and the rate is fixed. Check that your lender applies extra payments to principal and does not charge a prepayment penalty.
With the default inputs, the interest saved is $1,278.70. Change any value above to recalculate instantly.
How to use the loan payoff calculator
- 1Enter your current balance from your latest loan statement.
- 2Enter the interest rate and the number of months left.
- 3Add the extra amount you can pay each month.
- 4Optionally add a one-time lump sum, such as a bonus or tax refund.
- 5Compare the interest saved and new payoff time, then adjust the extra amount to hit your target.
Formula and method
Your regular payment M is the level payment that retires the current balance B over the remaining n months at monthly rate r (annual rate ÷ 12). The accelerated schedule applies any lump sum to the balance immediately, then each month charges interest on the remaining balance and pays M plus the extra amount E, with the final payment reduced to whatever is left.
Interest saved is the total interest on the original schedule minus the total interest on the accelerated one. Months saved is the difference in the number of payments. The model assumes a fixed rate and no prepayment penalties.
- B
- Current loan balance
- M
- Regular monthly payment
- E
- Extra monthly payment
- r
- Monthly interest rate (annual rate ÷ 12)
- n
- Months remaining on the loan
Worked examples
$25,000 at 7% with $150 extra a month
The regular payment on $25,000 at 7% over 60 months is $495.03. Paying $645.03 a month instead finishes the loan 15 months early and trims interest from about $4,702 to about $3,423 — roughly $1,279 saved.
$5,000 lump sum on a $40,000 loan
Putting a $5,000 bonus toward a $40,000, 8% loan with 84 months left while keeping the $623.45 payment removes 13 months from the loan and saves about $3,380 in interest.
Paying extra on a 20-year balance
On $150,000 at 6% with 20 years left, the payment is $1,074.65. An extra $200 a month finishes 62 months (over 5 years) sooner and saves around $31,000 of interest.
Frequently asked questions
Is it better to pay extra monthly or a lump sum?+
Both reduce principal. A lump sum paid now saves more than the same total spread over later months, because interest stops accruing on that money immediately. Regular extra payments are easier to sustain and still save a lot over a long loan.
Will paying extra lower my monthly payment?+
Usually not. On most installment loans the payment stays the same and the loan ends earlier. Some lenders, especially on mortgages, will recast the loan to lower the payment after a large principal reduction, sometimes for a fee.
Are there penalties for paying off a loan early?+
Many personal and auto loans have no prepayment penalty, but some do, particularly certain mortgages and subprime auto loans. Check your loan agreement or Truth in Lending disclosure for a prepayment penalty clause before sending extra money.
How do I make sure extra payments go to principal?+
Tell your lender, in writing or with the online payment option, that the extra amount should be applied to principal. Otherwise some servicers apply it to the next month’s payment, which does not reduce interest as much.
Should I pay off my loan early or invest?+
Paying off a loan earns a guaranteed return equal to its interest rate. If the rate is high (above roughly 6–7%), paying it down is often the better choice; for low-rate debt, investing may earn more over the long term but with risk.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.