01What this calculator tells you
An early payoff means clearing a loan before its scheduled end date by paying more than the required amount. This calculator shows how many months sooner you finish and how much total interest you save when you add an extra amount to every payment, make a one-time lump-sum payment toward principal, or do both. It works for any fixed-rate installment loan — auto, personal, student or mortgage.
Enter your current balance, interest rate and the time left on the loan, then add the extra you plan to pay. You don’t need to know your exact monthly payment — the calculator reconstructs it from the balance, rate and remaining term, then simulates the loan month by month to find the new payoff date. Compare it against other money tools in our full calculator library.
02Four ways to pay a loan off early
Every early-payoff strategy does the same thing — it puts more money against principal so less interest accrues. They differ only in how the extra is scheduled. The U.S. Department of Education (Federal Student Aid) and other lenders describe the same handful of tactics.
03Before you make extra payments
Paying a loan off early is usually smart, but a few details decide whether it is the best use of your cash. Weigh these before you commit a large sum.
- Check for a prepayment penalty. Some auto and personal loans charge a fee for early payoff; confirm with your servicer or read the CFPB’s auto-loan guidance.
- Tell the lender to apply extra to principal. Otherwise it may be credited toward your next payment, which does not shorten the loan.
- Compare the rate to other goals. Clearing an 18% debt beats clearing a 4% one; keep an emergency fund and any employer 401(k) match first.
- Highest-rate first. With several loans, extra money saves the most on the one with the highest interest rate.
The math here is exact for a fixed-rate, fully amortizing loan, but a few real-world details fall outside it. Treat the result as a close estimate.
- Fixed rate assumed. Variable-rate loans and credit cards recompute interest as the rate moves, so the estimate holds only while the rate does.
- Prepayment penalties and fees are not deducted — subtract any such fee from the interest saved shown above.
- Principal and interest only. Escrow, insurance or add-on products bundled into a payment are not part of the payoff math.
- Timing matters. The calculator assumes extra amounts start now; the earlier you begin, the larger the real saving, as the SEC’s compound-interest tool at Investor.gov illustrates.
- Enter your current loan balance and interest rate (APR).
- Enter the time left on the loan and choose months or years.
- Add an extra monthly payment, a one-time lump sum, or both.
- Press Calculate to see the new payoff time, months saved and total interest saved.
For another big cash-flow decision, try our mortgage recast calculator to compare long-run costs the same way.
04Related calculators
Working through a related project? Try our Out-the-Door Price Calculator, Lead Time Calculator, and TV Wall Mount Height Calculator.
01The early-payoff formula
The calculation has two parts: first reconstruct your required monthly payment from the balance, rate and remaining term, then simulate the loan month by month at a higher payment until the balance hits zero. The interest and months of that faster schedule are compared with the original to give your savings.
Where:
- B= the current loan balance you still owe.
- i= the monthly interest rate = APR / 12 (e.g. 7.5% -> 0.00625).
- n= the number of months remaining on the original schedule.
- extra= the fixed amount you add to each payment; the lump sum is applied to principal at the start.
02Worked example
Take a $25,000 loan at 7.5% APR with 48 months left, and add $150 a month. Work it one line at a time:
So an extra $150 a month clears this loan in about 38 months instead of 48 — roughly 10 months sooner and about $900 less interest. Because interest is charged on the balance that remains, the same $150 added in the first year saves far more than in the last. You can sanity-check the compounding with the compound interest calculator at Investor.gov, and review how each payment splits in the CFPB’s amortization explainer.