Free early payoff calculator

How extra payments save you money

Your regular loan payment is split two ways every month: part covers the interest your lender charges on the current balance, and whatever is left chips away at the principal you actually borrowed. An extra payment skips the interest line entirely. Every additional dollar goes straight to principal, which shrinks the balance that next month’s interest is calculated on. Reduce the balance and you reduce the interest, which leaves more of your normal payment free to attack principal too. That feedback loop is why a small, steady extra can snowball into years off the loan.

The reason the savings look so large is amortization. A fixed-payment loan is front-loaded with interest: in the early years most of each payment goes to the lender, and only a sliver touches the balance. Because of that, the earlier you add extra payments, the more interest you cancel for good — you never pay interest on principal you’ve already retired. The same math drives a mortgage, an auto loan or a student loan, so this calculator works for any of them.

How to use this calculator

Enter the four numbers that describe your loan today, then add an extra payment to see what changes:

• Loan balance. What you still owe right now, not the original amount you borrowed.
• Interest rate. Your annual rate (APR). The calculator converts it to a monthly rate behind the scenes.
• Years left. The remaining term — about 28 years if you took a 30-year mortgage two years ago.
• Extra payment per month. A recurring amount you’ll add on top of your normal payment.
• One-time extra. An optional lump sum — a tax refund, bonus or windfall — applied today.

The verdict at the top shows how much sooner you’d be debt-free and how much interest you’d save. The bars compare total interest with and without the extra. Open the payoff schedule & chart to see the two balance curves side by side — the dashed line is your current path, the solid one your accelerated plan — plus a year-by-year table of principal, interest and remaining balance.

A worked example

Say you owe $300,000 on a 30-year mortgage at 6.5%. Your payment is about $1,896 a month, and if you never change a thing you’ll pay roughly $383,000 in interest over the full term — more than the house itself. Now add $200 a month, bringing your payment to about $2,096. You’d pay the loan off around seven years early and cut your total interest to roughly $279,000. That’s about $100,000 saved for an extra $200 a month. Front-loaded interest is why such a modest add-on does so much work; try your own numbers above to see the effect on your loan.

Terms to know

• Principal. The amount you borrowed and still owe, separate from interest. Extra payments target this directly.
• Amortization. The schedule that spreads a loan into equal payments, with the interest-to-principal split shifting over time.
• Prepayment. Paying more than required, or paying early. It reduces principal and the interest charged on it.
• Prepayment penalty. A fee some loans charge for paying off early. Most US mortgages don’t have one, but check your note before you accelerate.

Should you pay early or invest?

Paying down a loan is a guaranteed, risk-free return equal to your interest rate. Clearing a 6.5% mortgage is like earning a tax-favored 6.5% with no market risk — genuinely hard to beat. Investing the same money instead might earn more over the long run, since stocks have historically returned more than that on average, but those returns are uncertain and can be negative for years at a stretch. The higher your loan rate, the more the guaranteed win from prepaying tends to make sense.

A reasonable order of operations: build an emergency fund first, since an overpaid loan is money you can’t easily get back in a pinch; knock out high-interest debt like credit cards before touching a low-rate mortgage; and capture any employer 401(k) match, which is an immediate return no payoff can match. After that, the choice is partly math and partly temperament — some people sleep better owning their home outright. This is general information, not financial advice; weigh it against your own situation. Our guides on whether to pay off your mortgage early and investing versus paying off debt walk through the trade-offs in more detail.

Related tools & guides

Modeling a home loan from scratch? Start with the mortgage calculator to find your payment and balance, then check how much room your budget really has with the take-home pay calculator. You’ll find the full set on the calculators page. If credit-card debt is the priority, read how to escape debt and get rid of credit cards before you put extra money toward a lower-rate loan.