Does the extra payment go entirely toward principal?

Yes. Your regular payment covers interest first, then principal. The extra payment amount is applied directly to the principal balance, which reduces all future interest charges. Most lenders apply overpayments this way by default, but confirm with your loan servicer that extra payments are applied to principal and not held for the next month's payment.

What types of loans does this calculator work for?

Fixed-rate auto loans, personal loans, and student loans with standard amortization. It does not model variable-rate loans, interest-only loans, or loans with deferred interest periods. For credit card debt, use the Credit Card Payoff Calculator instead.

Will my lender charge a prepayment penalty?

Some lenders do, especially on larger loans originated before 2013. Check your loan agreement for a prepayment penalty clause. Federal student loans have no prepayment penalty. Most auto loans originated after 2010 do not either. If a penalty exists, subtract it from the interest savings shown here to determine your net benefit.

How is the minimum payment calculated?

Using the standard amortization formula: M = P x [r(1 + r)^n] / [(1 + r)^n - 1]. This is the fixed monthly amount that pays off the loan exactly at the end of the original term with no extra payments. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.

How much extra should I pay each month?

Even $50 per month extra on a $25,000 loan at 7.5% saves roughly $560 in interest and cuts about 6 months off the loan. The tool lets you drag the slider to find the amount that matches your budget and desired payoff date. Any extra payment reduces your total cost.

Should I pay off my loan early or invest the extra money?

Compare your loan's APR to your expected after-tax investment return. If your loan charges 7.5% and your investments return 7% after taxes, paying down the loan is effectively a guaranteed 7.5% return. The calculator shows your exact interest savings so you can compare against your investment options. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.

Loan Payoff Strategy Calculator

This loan payoff calculator shows how extra monthly payments shorten your loan term and reduce total interest paid. Enter your current balance, APR, and remaining term, then adjust the extra payment slider to see exactly how many months you cut and how many dollars you save.

100% client-side. Your inputs stay in this browser.

Enter your remaining balance, rate, and original amortization term, then add an extra principal payment to see interest and time saved.

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Display currency

Loan balanceCurrent principal (what you still owe).Annual interest rate (%)Original loan term (30 yr)Used to compute your level monthly P&I with the balance above.Extra to principal / month

Scheduled P&I

$1,770

Level payment

Payoff (minimum only)

30 yr

$357,125 interest

Payoff (with extra)

22 yr 9 mo

$255,841 interest

You save

$101,283

87 fewer months

Remaining balance

How this tool works

The calculator uses the standard amortization formula to compute your minimum monthly payment, then runs a month-by-month simulation with and without extra payments. Each month, the interest charge equals the current balance times the monthly rate; your payment minus that interest reduces the principal. When you add extra payments, more principal gets knocked off each month, which means less interest accrues the next month. That snowball effect is why even a small extra payment produces outsized savings over the life of a loan.

Worked example

Loan balance: $25,000. APR: 7.5%. Original term: 60 months. Extra monthly payment: $100. With $100/month extra, the loan pays off around month 48 instead of month 60, saving approximately 12 months and $1,092 in interest. That $4,800 in total additional payments returned $1,092 in interest savings because the earlier months carry the most interest.

Frequently asked questions

Does the extra payment go entirely toward principal?
Yes. Your regular payment covers interest first, then principal. The extra payment amount is applied directly to the principal balance, which reduces all future interest charges. Most lenders apply overpayments this way by default, but confirm with your loan servicer that extra payments are applied to principal and not held for the next month's payment.
What types of loans does this calculator work for?
Fixed-rate auto loans, personal loans, and student loans with standard amortization. It does not model variable-rate loans, interest-only loans, or loans with deferred interest periods. For credit card debt, use the Credit Card Payoff Calculator instead.
Will my lender charge a prepayment penalty?
Some lenders do, especially on larger loans originated before 2013. Check your loan agreement for a prepayment penalty clause. Federal student loans have no prepayment penalty. Most auto loans originated after 2010 do not either. If a penalty exists, subtract it from the interest savings shown here to determine your net benefit.
How is the minimum payment calculated?
Using the standard amortization formula: M = P x [r(1 + r)^n] / [(1 + r)^n - 1]. This is the fixed monthly amount that pays off the loan exactly at the end of the original term with no extra payments. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.
How much extra should I pay each month?
Even $50 per month extra on a $25,000 loan at 7.5% saves roughly $560 in interest and cuts about 6 months off the loan. The tool lets you drag the slider to find the amount that matches your budget and desired payoff date. Any extra payment reduces your total cost.
Should I pay off my loan early or invest the extra money?
Compare your loan's APR to your expected after-tax investment return. If your loan charges 7.5% and your investments return 7% after taxes, paying down the loan is effectively a guaranteed 7.5% return. The calculator shows your exact interest savings so you can compare against your investment options. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.