Loan Payoff Calculator
See how extra payments can reduce your loan term and save money on interest
The Power of Extra Payments
Shorten Your Loan Term
Even small extra payments can significantly reduce the time it takes to pay off your loan. This means debt freedom sooner and more financial flexibility in your future.
Save on Interest
By paying down your principal faster, you'll reduce the overall interest paid over the life of the loan. The savings are often much greater than the return you'd get from many other investments.
Build Equity Faster
For mortgages and auto loans, extra payments help you build equity more quickly. This improves your financial position and gives you more options if you decide to sell or refinance.
Frequently Asked Questions
Should I make extra payments or invest the money instead?
This depends on your interest rate and investment opportunities. If your loan has a higher interest rate than what you could reasonably earn through investments (accounting for risk), making extra payments often makes more sense. For low-interest loans, investing might yield better returns.
How do I make sure extra payments go toward principal?
When making extra payments, clearly indicate that the additional amount should be applied to the principal balance, not future payments. Many lenders have specific instructions for this on their payment portals, or you may need to include a note with your payment.
Should I pay off my loan early if there's a prepayment penalty?
If your loan has a prepayment penalty, calculate whether the interest savings from extra payments outweigh the penalty. Sometimes it's still worthwhile to pay extra, especially if you're many years from the end of the loan term. In other cases, it might be better to wait until the prepayment penalty expires.
This calculator provides estimates for educational purposes. Your actual loan terms and payment schedule may vary. Always consult with a financial advisor or your lender for personalized advice about loan repayment strategies.