Loan Payoff (Extra Payment) Calculator
How much faster you pay off a loan with extra monthly payments.
Input sheet
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Adding even a modest amount to your monthly loan payment can shave years off the term and save thousands in interest, because every extra dollar attacks principal directly.
How it works
Solves the amortization formula for the number of months at each payment level; the difference is the time you save.
The tool solves the amortization formula for how many months the loan takes at your current payment versus your current payment plus the extra. The difference is the time you save; the interest saved comes from the total payments you avoid by finishing early.
Extra payments are most powerful early in a loan, when the balance — and therefore the interest accruing on it — is largest. The same extra $200/month saves far more on a fresh 30-year mortgage than on one with five years left.
Months at a payment = −ln(1 − (monthly rate × balance) ÷ payment) ÷ ln(1 + monthly rate); time saved = baseline months − accelerated months
Worked examples
$250,000 balance at 6%, $1,499 payment, $200 extra/month → ≈ 7.8 years sooner, with large interest savings
Adding $200/month to the $1,499 payment clears the loan roughly eight years early and eliminates a substantial chunk of the remaining interest.
Tips & gotchas
- Tell your servicer the extra goes to principal, not toward the next payment — otherwise it may just sit as a prepaid balance and earn you nothing.
- There's no need to commit to a fixed extra forever; even occasional lump sums (a bonus, a tax refund) toward principal compress the term.
- Check for prepayment penalties first — most modern mortgages have none, but some loans do.
- Weigh extra payments against other uses of the money: paying down a 6% loan is a guaranteed 6% return, which may or may not beat investing depending on your situation.
FAQ
Why does paying extra save so much interest?
Every extra dollar permanently removes principal that would otherwise have accrued interest for years. Reducing the balance early starves the loan of the interest it would have charged on that balance for the rest of the term.
Is it better to pay extra monthly or one lump sum a year?
Monthly is slightly better because the principal drops sooner and accrues less interest, but the difference is small. The bigger win is simply doing it consistently.
Should I pay extra or refinance?
They solve different problems. Refinancing lowers the rate; extra payments shorten the term at your existing rate. If rates have dropped meaningfully, refinance first, then add extra payments.
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