1. What is the Personal Loan Payoff Calculator?

The Personal Loan Payoff Calculator with Extra Payments estimates how quickly you can pay off a loan by making additional payments each month. It shows the time and interest savings from extra payments.

2. How Does the Calculator Work?

The calculator uses an iterative approach to determine when your balance reaches zero:

Where:

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

Explanation: Each month, interest is calculated on the remaining balance, then your payment (including extra) is applied to principal after paying interest.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce your loan term and total interest paid, often saving thousands of dollars.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, regular payment, and any extra amount you can pay. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments save me?
A: Typically $100 extra per month on a $20,000 loan at 7% can save ~$3,000 and cut 3 years off a 5-year loan.

Q2: Should I pay extra principal or invest?
A: Compare your loan interest rate to expected investment returns. Paying debt is a guaranteed return.

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

Q4: How often should I make extra payments?
A: Monthly is best, but any extra helps. Even annual bonuses or tax refunds applied to principal help.

Q5: Does this work for credit cards too?
A: The principle is similar, but credit cards typically have higher, variable rates and minimum payment formulas.