1. What is the Loan Payoff Calculator?

This calculator determines how quickly you can pay off a personal loan when making extra payments. It uses an iterative approach to calculate exactly when your balance will reach zero with your specified additional payments.

2. How Does the Calculator Work?

The calculator uses the following approach:

Where:

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

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

3. Importance of Extra Payments

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

4. Using the Calculator

Tips: Enter your loan details and any additional amount you can pay each month. The calculator will show your new payoff date and interest savings.

5. Frequently Asked Questions (FAQ)

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

Q2: Should I pay extra each month or make lump sum payments?
A: Regular extra payments are generally better as they reduce principal consistently, though any extra helps.

Q3: Does this work for all loan types?
A: This calculator is designed for standard amortizing personal loans. Mortgages may have different terms.

Q4: Will my lender apply extra payments correctly?
A: Always specify that extra payments should go toward principal, not future payments.

Q5: What's the best strategy for paying off loans early?
A: Pay as much extra as you can as early as possible to maximize interest savings.