Loan Payoff Calculator
Your monthly payment and total interest — plus how much an extra payment each month saves you.
How loan payoff works
Most loans are amortizing: you pay the same amount every month, but the mix inside that payment changes over time. Each month, the lender first takes interest — the remaining balance multiplied by the monthly rate (the APR divided by 12). Whatever is left of your payment chips away at the principal, the amount you still owe. Early on, the balance is big, so a large share of each payment is interest. As the balance falls, less goes to interest and more goes to principal, so the loan melts away faster near the end. It's the same structure behind most car loans, personal loans, student loans, and mortgages — only the size and timeline change.
The standard payment formula is: monthly payment = principal × r ÷ (1 − (1 + r)−n), where r is the monthly rate and n is the number of months. Total interest is simply the payment times the number of months, minus the amount you borrowed.
Worked example: borrow $10,000 at 6% APR for 36 months. The calculator gives a monthly payment of $304.22 and total interest of $951.90 — so the loan really costs $10,951.90 all-in.
Extra payments are powerful because they go straight to principal. A smaller balance means less interest is charged every month after, and the loan ends early. Add just $50 a month to the example above — $354.22 total — and you would be debt-free 5 months sooner and save $144.62 in interest. Use the "Extra payment" box above to test your own loan.
Loan payoff FAQ
What's the difference between a fixed and a variable APR?
A fixed APR never changes, so your payment stays the same for the whole loan and the numbers above hold exactly. A variable APR moves with a benchmark rate, so your payment or payoff time can change mid-loan — treat any calculation as a snapshot at today's rate.
Do extra payments automatically go toward principal?
Usually yes on installment loans, but not always — some servicers apply extra money to next month's payment instead, which doesn't cut your interest. Check your statement or ask the servicer to mark extra payments "apply to principal," and confirm the balance dropped by the full extra amount.
Should I pay off a loan early or invest the money instead?
Compare the loan's APR with what you'd realistically earn investing. Paying off a 6% loan is a guaranteed, risk-free 6% return; investing might earn more, but it can also lose value. Many people split the difference — kill high-interest debt first, invest while carrying cheap debt, and keep an emergency fund either way. This is general information, not personal advice.
What does APR actually include?
APR is the yearly cost of borrowing expressed as a percentage. For many loans it includes the interest rate plus certain fees — like origination fees — rolled into one number, which makes it better than the interest rate alone for comparing offers. For credit cards, APR is usually just the interest rate. It does not include every possible charge, such as late fees.
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