Loan Payoff Calculator
See exactly how much time and interest an extra monthly payment can save on any loan.
Enter your current loan details
Updates liveEstimates only. Assumes extra payments are applied directly to principal every month with no prepayment penalty.
Understanding loan payoff with extra payments
Adding even a modest amount to your regular loan payment can shorten your payoff timeline by years and save a substantial amount in interest — because that extra amount reduces your principal balance immediately, rather than being split between principal and interest like the rest of your payment.
This calculator simulates your loan month by month, comparing your original payoff schedule against one with your chosen extra payment added every month.
How the payoff simulation works
Unlike a simple monthly payment, "months until payoff with an extra payment" has no single algebraic formula — so this calculator simulates the loan one month at a time using the standard amortization relationship:
The simulation repeats this each month — once with your original payment, once with your original payment plus your extra amount — until each balance reaches zero, then compares the two timelines.
Step-by-step: how to use this calculator
- Enter your current balance — check your latest loan statement for the exact figure.
- Enter your interest rate exactly as shown on your statement or loan documents.
- Enter your remaining term in months — for example, 25 years remaining is 300 months.
- Enter the extra amount you're considering adding to each monthly payment.
- Compare the time saved and interest saved before committing to a new payment plan.
Worked example
Suppose you have a $250,000 balance, a 6.25% interest rate, and 300 months (25 years) remaining. You're considering an extra $200 per month.
| Scenario | Value |
|---|---|
| Original monthly payment | $1,649.17 |
| Original total interest (25 years) | $244,752 |
| New payment (original + $200 extra) | $1,849.17 |
| New payoff time | 19 yr 7 mo |
| Time saved | 65 months |
| Interest saved | $61,228 |
Try these same numbers in the calculator above to confirm the result.
Interpreting your results
The interest saved figure represents money that simply never accrues — it's not a return on an investment, it's a cost you avoid entirely. Compare this "guaranteed savings rate" (roughly your loan's interest rate) against what you could otherwise earn by investing that same extra amount, factoring in your own risk tolerance and timeline.
Common mistakes to avoid
- Committing to a large extra payment that strains your monthly budget or emergency fund.
- Ignoring higher-interest debt (like credit cards) that would benefit more from extra payments than a lower-rate loan.
- Forgetting to check for prepayment penalties before making large extra payments.
- Assuming the "time saved" figure applies if you ever skip a month's extra payment — consistency matters for the projection to hold.
Frequently asked questions
How does an extra payment save me money?
Every extra dollar you pay goes entirely toward reducing your principal balance, rather than being split between principal and interest like a regular payment. A lower balance means less interest accrues every month going forward, which compounds into significant savings over the life of the loan.
Should I pay extra toward my mortgage or invest the money instead?
This depends on your loan's interest rate compared to your expected investment return, your risk tolerance, and whether you have higher-interest debt elsewhere. Paying down a loan is a guaranteed, risk-free return equal to your interest rate; investing carries market risk but has historically outperformed typical mortgage rates over long periods.
Will my lender apply extra payments to principal automatically?
Not always. Some lenders apply extra amounts to your next month's payment instead of the principal balance unless you specifically instruct them otherwise. Always confirm with your servicer that extra payments are being applied directly to principal.
What if I can only make an extra payment occasionally, not every month?
Even occasional extra payments — an annual bonus, a tax refund — reduce your balance and future interest. This calculator assumes a consistent monthly extra payment, so for a one-time lump sum, treat it as if you added that amount to a single month's balance and re-run the numbers with the new, lower starting balance.
Is there a penalty for paying off a loan early?
Some loans, particularly certain personal loans and older mortgages, include prepayment penalties. Most modern U.S. mortgages do not. Check your loan agreement or ask your lender before making large extra payments.
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Conclusion
Extra payments are one of the few guaranteed ways to reduce the total cost of a loan. Even a small, consistent amount can cut years off your payoff timeline — run a few different extra-payment amounts above to find one that fits comfortably in your budget.