1. What is the Early Loan Payoff Calculation?

The Early Loan Payoff calculation determines how much you would need to pay today to completely pay off your loan, based on your current monthly payment, interest rate, and remaining loan term.

2. How Does the Calculator Work?

The calculator uses the loan payoff formula:

Where:

• \( RB \) — Payoff amount (remaining balance)
• \( PMT \) — Monthly payment amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( m \) — Number of remaining monthly payments

Explanation: The formula calculates the present value of all remaining payments, accounting for the time value of money.

3. Importance of Payoff Calculation

Details: Knowing your payoff amount helps when considering refinancing, selling an asset, or paying off debt early to save on interest.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly rate?
A: Divide your annual percentage rate by 12 (for 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 additional prepayment fees.

Q3: Why is my payoff amount different from my remaining principal?
A: The payoff includes both remaining principal and the interest you would have paid over the remaining term.

Q4: Can I use this for any type of loan?
A: This works best for fixed-rate installment loans (mortgages, auto loans). It may not be accurate for variable-rate or interest-only loans.

Q5: How accurate is this calculator?
A: It provides a good estimate, but your lender's exact payoff amount may vary slightly due to rounding or specific loan terms.