Loan Payoff Calculator
See how extra payments shorten your loan term and reduce interest. Works for personal, auto, student, and other fixed-rate loans.
Frequently Asked Questions
How does making extra payments reduce my loan term?
Extra payments reduce your principal balance faster, which means less interest accrues between payments. Each extra dollar saves the interest rate on that dollar for the remaining loan term. Even one extra payment per year can shave years off a mortgage.
Should I pay off debt early or invest instead?
If your loan APR is higher than your expected investment return (after taxes), pay the debt first. For most people, debt above 5–6% APR should be prioritized. Below that, investing may earn more over time, especially with tax-advantaged accounts.
Does making biweekly payments save money?
Yes. Biweekly payments result in 26 half-payments per year, which equals 13 full payments instead of 12. This one extra payment annually can shorten a 30-year mortgage by about 4 years and save tens of thousands in interest.
What happens when I make an extra principal payment?
The payment goes directly to reducing your loan principal, not prepaying future payments. Your regular payment schedule remains unchanged, but your loan ends earlier because the principal is being paid down faster.
Is it better to make extra payments monthly or as a lump sum?
Lump sums save slightly more interest because the entire amount reduces principal earlier. However, monthly extra payments build a consistent habit. Financially, the total savings are nearly identical — choose the approach you can actually stick with.
Why this matters
On a $20,000 loan at 5% APR: minimum payments take 42 months and cost $2,200 in interest. Adding $100/month extra cuts it to 33 months and saves ~$700. The effect compounds faster on higher-rate personal loans at 12–20% APR.