Loan Payoff Calculator
Find out exactly when you'll be debt-free and how much interest you'll pay. Compare loan scenarios and build a complete payoff plan.
Loan Details
How the Loan Payoff Calculator Works
Each monthly payment has two components: the interest portion (balance × monthly rate) and the principal portion (payment − interest). As you pay down the principal, less of each payment goes to interest and more goes to paying off the debt. This is called amortization.
Speed Up Your Payoff: The Extra Payment Effect
Even small extra payments have a dramatic impact. On a $15,000 loan at 8.5% with $350/month payments, adding just $100 extra per month can eliminate over 1 year of payments and save hundreds in interest. Try it with the Extra Monthly Payment field above.
Everything About the Loan Payoff Calculator
The amortization formula, how extra payments dramatically cut loan life, and strategies to become debt-free faster.
How It Works
- Enter your loan amount (original or remaining principal)
- Enter annual interest rate and loan term in years
- See your required monthly payment to pay off on schedule
- Add an extra monthly payment to model accelerated payoff
- View full year-by-year amortization breakdown
The Formula
M = P × [r(1+r)²] ÷ [(1+r)² − 1]
Total Interest = (M × n) − P
P = principal · r = monthly rate (APR ÷ 12) · n = total months. Every extra dollar goes directly to principal, reducing future interest charged.
Pro Tips
- Adding just $100–200/month extra can eliminate 5–7 years from a 30-year mortgage
- Refinance when rates drop 1%+ below your current rate — run break-even analysis on closing costs
- Bi-weekly payments (26 half-payments/year) = 1 full extra payment per year automatically
- Round up your payment to the nearest $50 — the consistency of the habit matters most
Frequently Asked Questions
What is amortization and how does it work? +
Amortization means your fixed monthly payment stays constant, but the interest-vs-principal split changes every month. Early in a loan, most of your payment covers interest (because the outstanding balance is large). As you pay down the balance, less is owed to interest and more goes to principal. In Year 1 of a 30-year mortgage, less than 20% of your payment reduces the actual balance. This is why extra payments made early in a loan save dramatically more interest than extra payments made later.
How do extra principal payments save money? +
Extra payments directly reduce your outstanding principal. This lowers the balance on which next month's interest is calculated, so more of your regular payment goes to principal the following month — creating a compounding acceleration effect. The earlier in the loan you make extra payments, the more the savings compound. Example: adding $100/month to a 30-year, 6.5% mortgage on $300,000 saves about $67,000 in interest and cuts the loan by over 4 years.
When does refinancing a loan make financial sense? +
Refinancing replaces your existing loan with a new one to get better terms. It makes sense when: the monthly savings on your new payment outweigh the closing costs (typically 2–5%) within your break-even period (usually 2–3 years). Formula: closing costs ÷ monthly savings = break-even months. If you plan to stay in the home or keep the loan beyond the break-even point, refinancing saves money. Watch out for extending your loan term, which can increase total interest paid even with a lower rate.
What's the difference between a 15-year and 30-year mortgage? +
A 15-year mortgage has higher monthly payments but a lower interest rate and dramatically less total interest paid — typically 40–50% less than a 30-year. On a $300,000 loan, a 30-year at 6.5% costs about $382,000 in total interest vs. approximately $143,000 on a 15-year at 5.8%. The 30-year provides cash flow flexibility; the 15-year builds equity faster and saves more money long-term. If you can afford the 15-year payment comfortably, it's almost always the better financial choice.
What is a balloon payment loan? +
A balloon loan has lower monthly payments but requires a large lump-sum payment at the end of the term — for example, 5 years of normal payments followed by the entire remaining balance due at once. Common in commercial real estate and some adjustable mortgages. It's risky: if you can't pay the balloon when it comes due and can't refinance (due to bad credit, low property values, or tight credit markets), you could lose the property. Always have a clear exit strategy before accepting balloon financing.