Loan payoff calculator

Each month, interest is charged at rate / 12 on the remaining balance, and your payment covers that interest first; the rest reduces the principal. The calculator repeats this month by month until the balance reaches zero, once with your regular payment and once with the extra amount added, and compares the two.

Extra payments go entirely to principal. That lowers the balance that next month's interest is charged on, so every extra dollar saves interest for the rest of the loan. That's why extra payments early in a loan save much more than the same payments near the end.

If your payment doesn't cover the monthly interest, the balance would never go down; the calculator flags this instead of showing a payoff date.

You owe $18,000 on a car loan at 7.5%, paying $400 a month.

• Paid off in 54 months with $3,201.45 of interest left to pay.
• With $100 extra a month: paid off in 41 months, with $2,455.16 of interest.
• You save $746.29 and finish 13 months sooner.

If your car loan uses simple interest, as most do, extra payments reduce interest the same way. Some older loans used precomputed interest (the Rule of 78s), where paying early saves less; check your contract.

A $25,000 student loan at 5.5% with a $300 monthly payment:

• Without extra payments: 106 months (8 years 10 months) and $6,567.46 of interest.
• With $200 extra a month: 57 months (4 years 9 months) and $3,459.63 of interest.
• You save $3,107.83 and finish 49 months early.

Before putting extra money toward federal student loans, compare it with other uses: income-driven repayment, forgiveness programs and interest subsidies can change the math. Federal student loans have no prepayment penalty.

Paying extra on a loan gives you a guaranteed return equal to the loan's interest rate. Whether that's the best use of the money depends on your situation:

• Emergency fund first. Money paid into a loan is hard to get back. Keep a cash cushion before making large extra payments.
• Higher-rate debt first. Credit card balances at 20% or more should usually come before a car loan at 7%.
• Employer match. Missing out on a 401(k) match usually costs more than the interest you'd save.
• Low-rate loans. If a loan's rate is below what safe savings pay, there's little financial gain in paying it off early, though being debt-free has value of its own.
• Prepayment penalties. Most auto, student and personal loans have none, but check your agreement.

• Tell your lender the extra amount is for principal, not for future payments. Some servicers apply extra money to the next installment unless told otherwise, which doesn't save interest.
• Check your next statement to make sure the principal went down by the extra amount.
• Rounding up helps: paying $450 instead of $412 is an easy habit.
• Windfalls such as a tax refund or bonus can go in as a one-time payment; the amortization calculator lets you add a lump sum in a specific month.

Your required payment usually stays the same after extra payments; the loan just ends sooner. Mortgages can sometimes be recast to lower the payment instead.

The chart compares the balance with and without extra payments, and the full month-by-month schedule can be downloaded as CSV or printed, free. Your inputs are saved in the link, so you can bookmark the plan or send it with the Share button. The calculator assumes a fixed rate and no new borrowing. This is an estimate, not financial advice.