How to use this calculator
- Enter your remaining loan balance, annual rate, and remaining term.
- Enter the extra amount you plan to pay each month.
- Compare total interest and payoff time for the baseline vs. accelerated plan; the chart shows both balance curves.
How it works
New payment = base payment + extra; simulate month by month until balance = 0
The extra payment reduces principal directly, so every later month accrues interest on a smaller balance — a compounding saving. The baseline is an annuity (fixed-payment) loan.
Frequently asked questions
Is paying off early always worth it?
Not always. If your investments reliably earn more than your loan rate, investing the extra may win. If the loan rate is above safe investment returns, prepaying is effectively a risk-free return at that rate.
What about prepayment penalties?
Many lenders waive penalties after a few years — check your contract. If a penalty applies, treat it as a one-time extra payment in month one to gauge the break-even.
Shorten the term or reduce the payment?
Shortening the term saves the most interest; reducing the payment improves monthly cash flow. This tool models the term-shortening approach.
Is there a cap on the extra amount?
Only that your total monthly payment must cover each month's interest. The larger the extra, the shorter the payoff and the bigger the savings.
Disclaimer Results are for reference only and do not constitute financial, tax, or legal advice. Actual rates, returns, and fees depend on the terms of your financial institution.