1. What is the Early Payoff Calculation?

The early payoff calculation determines how much you would need to pay today to completely pay off an existing loan, considering the remaining payments and the interest rate.

2. How Does the Calculator Work?

The calculator uses the early payoff equation:

Where:

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

Explanation: The equation calculates the present value of all remaining payments at the loan's interest rate.

3. Importance of Early Payoff Calculation

Details: Knowing your early payoff amount helps in financial planning, especially when considering refinancing, selling property, or paying off debt early to save on interest.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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

Q2: Does this include any prepayment penalties?
A: No, this calculation doesn't account for any prepayment penalties your lender might charge. Check your loan terms.

Q3: Why would I want to know my early payoff amount?
A: Useful when considering lump-sum payments, refinancing, or selling an asset with an outstanding loan.

Q4: Is this calculation accurate for all loan types?
A: This works best for standard amortizing loans. Some loans (like interest-only or balloon payments) may require different calculations.

Q5: How often should I check this amount?
A: Check whenever you're considering early payoff or when your financial situation changes significantly.