1. What is the Early Payoff Calculator?

This calculator helps you determine how much you'll save by making extra payments on your car loan. It shows your remaining balance, time saved, and interest saved when you pay more than your regular monthly payment.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

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

Explanation: The formula calculates the present value of the remaining loan payments, showing what you would need to pay today to completely pay off the loan.

3. Benefits of Early Payoff

Details: Paying off your car loan early can save you hundreds or thousands in interest, free up your monthly budget sooner, and reduce your overall debt burden.

4. Using the Calculator

Tips: Enter your regular monthly payment, monthly interest rate (annual rate ÷ 12), remaining number of payments, and any extra amount you plan to pay each month.

5. Frequently Asked Questions (FAQ)

Q1: How do I find my monthly interest rate?
A: Divide your annual percentage rate (APR) by 12. For example, 6% APR = 0.06/12 = 0.005 monthly rate.

Q2: Should I pay extra each month or make a lump sum?
A: Regular extra payments save more interest than a single lump sum, as they reduce the principal faster.

Q3: Are there prepayment penalties?
A: Most car loans don't have prepayment penalties, but check your loan agreement to be sure.

Q4: How much extra should I pay?
A: Even $20-50 extra per month can make a significant difference over the life of the loan.

Q5: Does this work for other loans?
A: Yes, this calculation works for any amortized loan (mortgage, personal loan, etc.) with fixed payments.