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Business finance / Loan Payoff Calculator

Loan Payoff Calculator

See how much faster you pay off a loan with extra monthly payments or a lump sum, how many months you cut and how much interest you save.
$

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%

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$

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Principal and interest only, as on your statement.

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$

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A bonus, tax refund or sale proceeds put toward the balance today.

Paid off in
4 years 1 month
11 monthssooner
$1,238.14interest saved
$4,883.28interest with extra payments
$0interest at your current payment $6,121.42
  • Interest you still pay
  • Interest saved
At your current payment · $520.00 a month5 years
Total interest at current payment$6,121.42
With extra payments · $620.00 a month4 years 1 month
Total interest with extra$4,883.28
Time saved11 months
Interest saved$1,238.14
Interest saved per extra dollar · return on prepaying, like a guaranteed rate25.3%

Check that your lender applies extra payments to principal and doesn't charge a prepayment penalty. Paying a loan off early earns you its interest rate, risk-free.

See breakdown

How the loan payoff calculation works

  1. Each month, interest comes first

    At 9% APR, a $25,000 balance builds $187.50 of interest in a month. Of a $520 payment, the rest ($332.50) pays down the balance.

  2. Extra payments go straight to principal

    An extra $100 a month lowers the balance faster, so every later month has less interest.

  3. Compare the two payoff times

    At $520 a month the loan takes 5 years; at $620 it takes 4 years 1 month.

  4. Add up the interest saved

    The extra payments cut total interest from $6,121.42 to $4,883.28, saving $1,238.14.

Worked example. A $25,000 loan at 9% APR with a $520 monthly payment is paid off in 5 years with $6,121.42 of interest. Paying $100 more each month pays it off in 4 years 1 month with $4,883.28 of interest, saving $1,238.14 and 11 months. A one-time $5,000 payment instead saves $2,436.65 and 14 months.

Loan Payoff FAQ

How much faster can I pay off my loan with extra payments?

Enter your balance, rate, current payment and the extra amount. The calculator compares the payoff time and total interest with and without the extra payments.

Is it better to make one lump sum or extra monthly payments?

A lump sum now saves the most interest per dollar because it cuts the balance immediately. Extra monthly payments are easier to fit into a budget. Try both above.

Do extra payments go toward principal?

Usually, but ask your lender to apply them to principal, not to next month's payment, and check for prepayment penalties first.

Should a business pay off a loan early?

Paying it off earns the loan's interest rate risk-free, but cash you need for slow months or growth may be worth more. Keep a cash cushion before prepaying.

Why does my payment never pay off the loan?

If the monthly payment is less than the monthly interest, the balance grows instead of shrinking. Raise the payment above the first month's interest.

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