Loan Payoff Calculator: Pay Off Debt Faster
See how long it will take to pay off a loan or credit card, how much interest you will pay, and exactly how much an extra monthly payment or lump sum saves.
Your details
Your current required payment.
Results
Paying $400.00 a month clears $20,000 at 7.5% in 5 yr 1 mo with $4,055 interest. Adding $100 a month pays it off in 3 yr 11 mo and saves $969.
Debt-free in
3 yr 11 mo
- Without extra payments
- 5 yr 1 mo
- $4,055 interest
- With extra payments
- 3 yr 11 mo
- $3,087 interest
- Interest saved
- $969
- Time saved
- 1 yr 2 mo
| End of year | Balance (with extra) | Interest that year |
|---|---|---|
| 1 | $15,342 | $1,342 |
| 2 | $10,322 | $980 |
| 3 | $4,913 | $591 |
| 4 | $0 | $173 |
How loan payoff works
Each month, interest is charged on whatever you still owe (balance × APR ÷ 12). Your payment covers that interest first and the rest reduces the balance. Anything extra you pay goes entirely to the balance, which means next month's interest charge is smaller, so a bigger share of the same payment reduces the balance again. That snowball is why modest extra payments save so much over a long loan.
Strategies that work
- Round up. Paying $450 instead of $386 feels small but can cut months off a five-year loan.
- Avalanche. Put extra money toward the highest-rate debt first; it saves the most interest.
- Snowball. Pay the smallest balance first for a quick win, then roll that payment into the next debt.
- Windfalls. A tax refund or bonus applied as a lump sum removes interest for every remaining month.
Whatever you choose, confirm with your servicer that extra amounts are applied to principal rather than counted as an early payment for next month.
Frequently asked questions
Should I pay extra on my loan or invest the money?
Compare the loan's interest rate to the after-tax return you realistically expect from investing. Paying down a 20% credit card is almost always the better move; paying down a 3% mortgage early is a closer call and often loses to investing or to keeping an emergency fund. Many people split the difference.
Does making one extra payment a year help?
Yes. One extra payment a year (or paying biweekly, which produces 13 monthly payments) on a 30-year mortgage typically shortens the loan by about four years and saves a substantial share of the interest. Enter your monthly payment divided by 12 in "extra per month" to model it.
Are there prepayment penalties?
Most conventional mortgages, federal student loans, and auto loans have none, but some personal loans and older or non-conforming mortgages do. Check your loan agreement before sending a large lump sum, and tell the servicer to apply extra payments to principal, not to future payments.
Why does the interest saved seem so large?
Interest is charged on the outstanding balance every month. Extra principal reduces the balance immediately, so every remaining month accrues a little less interest, and those small savings compound over years. The effect is largest early in a long loan.