Loan Payoff Calculator
Calculate the true cost of a car, personal, or student loan — your monthly repayment, total interest paid, and a full amortisation schedule showing how much of each payment goes to principal versus interest.
How it works
- Enter your current loan balance and interest rate.
- Set your minimum monthly payment, then try a higher payment to compare.
- The tool shows the payoff date and total interest for both scenarios side by side.
- Adjust the extra payment slider to find the sweet spot between time saved and monthly cost.
How the payoff date is worked out
The standard monthly payment for a fixed-rate instalment loan comes from the amortisation formula: payment = P x r x (1 + r)^n / ((1 + r)^n - 1), with P the amount borrowed, r the annual rate divided by 12 and n the term in months. The calculator then walks through the loan month by month. Each month, interest is the remaining balance times r, and the rest of your payment, plus any extra amount you entered, goes to principal. The loop ends when the balance reaches zero, and the number of months it took gives the payoff date, counted from today.
Because the extra amount goes entirely to principal, it reduces the balance that next month's interest is charged on. That compounding effect is why a modest regular overpayment shortens a loan by much more than the same money would if it were paid once at the end.
A worked example
Borrow 15,000 at 6.5% over 5 years. The monthly payment is 293.49, the loan takes 60 months, and total interest is 2,609.53. Add 100 a month in the Extra field: the loan is cleared in 43 months, 17 months sooner, total interest falls to 1,847.04, and you save about 762.49. You pay 393.49 a month instead of 293.49, but for 17 fewer months, so the total you pay drops from 17,609.53 to 16,847.04.
Getting a useful answer
The repayment table shows the first 24 months, which is enough to see how the split between interest and principal changes. Extra payments help most at the start of a loan and on loans with higher rates, so a credit-card style balance at 20% responds much more strongly than a car loan at 4%.
- Check with your lender that overpayments are applied to principal immediately, and not held back as a prepayment of future instalments.
- Check for early-repayment charges. A fee can cancel out the interest you would save.
- If the loan has a variable rate, rerun the calculation whenever the rate changes.
Assumptions and limits
The tool assumes a fixed annual rate, equal monthly payments, interest calculated monthly on the declining balance, and no fees or insurance. Loans that charge interest daily, add arrangement fees to the balance, or allow payment holidays will differ slightly. The payoff date is an estimate based on today's date, and the final payment is whatever remains rather than a full instalment. Terms are capped at 600 months (50 years), and the tool does not model credit cards, where the minimum payment changes as the balance falls.
Frequently asked questions
Why does more of my payment go to interest at the start of the loan?
Interest is charged on the remaining balance, which is highest at the beginning. As the balance shrinks with each payment, more of each subsequent payment goes toward principal.
How can I pay less interest overall?
Any extra payment that reduces principal early — a shorter term, a larger down payment, or occasional lump-sum overpayments — reduces the balance interest is calculated on for the rest of the loan.
Sources and further reading
Formulas checked against the sources below. Last reviewed . General information only, not professional advice.