Loan Payoff Calculators

The loop is short enough to state in a sentence. Charge one month's interest on the outstanding balance, subtract that interest from the payment, put what is left against the principal, and repeat until the balance reaches zero. Nothing in it knows whether the money bought a house, a car or a semester. The number of rows it produces is the number of payments left, the date of the last row is the payoff date, and the sum of the interest column is what the loan costs.

A schedule does not remember what came before it. Take $20,000 at 6.000% over sixty months: the scheduled payment is $386.66, and after eighteen payments the balance is $14,614.87. Enter that $14,614.87 with forty-two months remaining and the result is the same $386.66 payment, the same $386.41 final payment, and $1,624.60 of interest still to pay — exactly the tail of the original schedule, to the cent. A loan halfway through its term therefore needs no special treatment: the current balance and the months left are the whole state. Entering the original $20,000 with forty-two months left describes a different loan, one whose payment is $529.13.

Every figure on every page in this section is read off that schedule rather than out of a closed-form formula. The final payment is whatever clears the balance, normally a few cents under the others because the scheduled payment is rounded up to the next cent so the schedule can never run past its stated term. Multiplying the payment by the number of payments gives a total that is wrong by that shortfall — $3,199.60 against the schedule's $3,199.35 on the loan above. The arithmetic, the rounding rule and the published test vectors are set out on the methodology page.

Term length is the largest difference between loan types, and it moves the total more than most people expect. The same $20,000 at 6.000% costs $1,903.82 in interest over thirty-six months, $3,199.35 over sixty and $4,542.20 over eighty-four. Nothing changed except how long the money stays out. Consumer terms cluster by product — three to seven years on a car, ten years on a standard student repayment schedule, fifteen or thirty on a mortgage — and that clustering, rather than any difference in the math, is why the pages in this section start from different default numbers.

The term also decides how much of the first payment is interest rather than principal. On thirty-six months at 6.000%, the first month's interest is 16.4% of the payment; on sixty months it is 25.9%; on a thirty-year loan at 6.500% it is 85.7%. That split depends only on the rate and the term, not on how much was borrowed: $20,000 at 6.500% over thirty years has the same 85.7% first payment as $300,000 does, because the payment and the first month's interest both scale with the balance and the ratio between them does not.

Rate moves the total without changing the shape. $15,000 over forty-eight months costs $1,581.08 in interest at 5.000%, $3,608.73 at 11.000% and $6,909.68 at 20.000% — the same forty-eight rows, the same falling balance, more than four times the interest across the spread that separates secured borrowing from unsecured. A rate is an input here and nothing more. No page on this site quotes a rate anyone is offering, and the defaults are round numbers chosen to keep the worked examples readable.

One extra payment is worth far more on a long loan than on a short one. A single extra $100 paid with the first payment and never repeated saves $34.21 over five years at 6.000%. The same $100, paid once with the first payment on $300,000 at 6.500% over thirty years, saves $595.34. Neither one removes a payment from the schedule; both shrink the last one. The only difference is how many years that dollar would otherwise have spent accruing interest, which is also why the same extra is worth less the later it is paid.

The payment modeled here is principal and interest, and nothing else. On a mortgage, a servicer usually collects property tax, home insurance and any mortgage insurance in the same monthly bill, so the bill is larger than the part that actually pays the loan down. On a personal loan there is normally nothing on top at all, though an origination fee deducted from the disbursement means the balance owed is larger than the amount that arrived. An auto loan sits in between: tax, title, a service contract or gap coverage financed at signing are not added to the bill each month, they were added to the amount borrowed, so they sit inside the balance. A student loan balance at the start of repayment can likewise exceed what was borrowed, because interest that accrued during school may have been capitalized into it.

Entering the whole bill as the payment produces a confident, wrong answer. On $300,000 at 6.500% over thirty years the principal-and-interest payment is $1,896.21. Enter $2,400 — an unremarkable bill once escrow is in it — and the schedule ends after 210 payments instead of 360, appearing to cut twelve and a half years and $180,435.61 of interest off the loan. Every row of that schedule is arithmetically correct and none of it is about your mortgage. The number to enter is the principal-and-interest figure from the note or the statement, and escrow belongs nowhere in this calculation.

Nothing here knows about a prepayment penalty, and some loans do not work this way at all. Where an agreement charges for paying off early, the interest saved shown on these pages is the figure before that charge. Federal student loans carry no such penalty and neither do credit cards; some auto and personal loan agreements do, and the agreement is the only place that settles it. A loan written with precomputed interest is a different animal again: the interest was fixed at origination and built into the payments rather than accrued on the balance month by month, so paying early earns a rebate under the contract's own formula instead of stopping an accrual. This engine models simple interest on the outstanding balance, does not model the other case, and says so rather than approximating it.

Three questions settle it, and none of them is what the loan bought. First, one balance or several: several balances sharing a single monthly budget is a different calculation rather than a larger one, and it lives in the debt section. Second, a fixed installment or a revolving minimum: a credit card's required payment falls as the balance falls, which stretches the end of the schedule out of all proportion — $5,000 at 24.000% paid at the common minimum of the greater of $25.00 and one percent of the balance plus that month's interest takes 234 payments and $8,886.94 in interest, which the credit card page models directly. Third, what you want out of it: the payment, the payoff date, or the value of paying more than you owe.

Among the fixed-installment pages, picking the wrong one costs nothing. They run the identical engine on the identical arithmetic. What differs is the default scenario, the wording on the input fields, and which of the model's blind spots each page spends its space on — escrow and bi-weekly cadence in one place, an origination fee in another, capitalized interest in a third. Any of them will run a fixed-rate loan of any size correctly. The reason there are several is that each one answers the questions that particular borrower arrives with, not that each one computes something different.

The question worth matching carefully to the loan is the extra-payment one. Adding about ten percent to the payment on $20,000 at 6.000% over five years — $38.67 a month — clears the loan in 54 payments instead of 60 and saves $342.40, which is 10.7% of the interest. Adding the same ten percent to a $300,000 mortgage at 6.500%, $189.62 a month, clears it in 280 payments instead of 360 and saves $99,630.19, or 26.0%. The effort is proportionally identical and the return is not, because what an extra dollar earns is set by the years of interest it cancels rather than by the size of the loan.