1. What is the Early Payoff Calculation?

The early payoff calculation determines the remaining balance (RB) needed to pay off an auto loan early. It considers the monthly payment (PMT), interest rate (r), and remaining number of payments (m).

2. How Does the Calculator Work?

The calculator uses the early payoff equation:

Where:

• \( RB \) — Remaining balance to pay off loan ($)
• \( PMT \) — Monthly payment amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Number of remaining payments

Explanation: The equation calculates the present value of all remaining payments, accounting for the time value of money through the interest rate.

3. Importance of Early Payoff Calculation

Details: Knowing your early payoff amount helps when considering refinancing, selling a vehicle, or paying off a loan early to save on interest.

4. Using the Calculator

Tips: Enter your regular monthly payment amount, monthly interest rate (annual rate ÷ 12), and number of payments remaining. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide your annual percentage rate by 12 (months) and by 100 to convert to decimal. Example: 6% APR = 0.06/12 = 0.005 monthly rate.

Q2: Does this include any prepayment penalties?
A: No, this calculates only the remaining principal and interest. Check your loan terms for any prepayment penalties.

Q3: Why is my payoff amount different from my remaining principal?
A: The payoff includes both remaining principal and accrued interest up to the payoff date.

Q4: How accurate is this calculator?
A: It provides a close estimate, but your lender may use slightly different methods or account for daily interest accrual.

Q5: Can I use this for other types of loans?
A: Yes, it works for any fixed-rate installment loan (mortgages, personal loans) with equal monthly payments.