1. What is the Loan Payoff Calculator With Extra Payments?

This calculator determines how quickly you can pay off a loan by making additional payments beyond the required monthly payment. It shows the time and interest savings from making extra payments.

2. How Does the Calculator Work?

The calculator uses an iterative approach to solve:

Where:

• \( n \) — Number of months until payoff
• \( P \) — Principal amount (USD)
• \( r \) — Monthly interest rate (decimal)
• extra payments — Additional payments (USD)
• PMT — Monthly payment (USD)

Explanation: The calculator tracks each month's payment, applying extra amounts to principal until the balance reaches zero.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce loan term and total interest paid. This calculator helps visualize those savings.

4. Using the Calculator

Tips: Enter loan details and any planned extra payment. All values must be positive (principal > 0, rate ≥ 0, term > 0, extra payment ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments save?
A: Even $50-100 extra per month can save thousands in interest and cut years off a mortgage or loan.

Q2: Should I pay extra principal or invest?
A: Depends on your loan rate vs. expected investment returns. Paying off high-interest debt first is often best.

Q3: Do all loans allow extra payments?
A: Most do, but some have prepayment penalties. Check your loan terms first.

Q4: When is the best time to make extra payments?
A: Earlier in the loan term saves more interest, but any time helps.

Q5: Can I specify irregular extra payments?
A: This calculator assumes consistent extra payments. For irregular payments, use an amortization schedule.