Loan Payoff Calculator with Extra Payments

See how extra monthly payments shorten a loan and cut total interest — compare payoff time and interest with and without overpayment.

Result

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How to use this calculator

Enter the loan amount, annual rate, and original term.
Enter the extra amount you plan to pay each month.
Read the new payoff time and the total interest saved.
Compare original versus accelerated payoff in the breakdown.

About this calculator

Making extra payments on a loan is one of the most reliable ways to save money, because every additional dollar goes straight to principal — and reducing the principal cuts the interest charged on every remaining month. This calculator amortizes your loan twice: once with the standard payment and once with your extra monthly amount added. It then shows how many months and how much interest the extra payments save. The effect is often dramatic on long mortgages: even a modest extra amount each month can shave years off the term and tens of thousands of dollars off the total interest, because interest savings compound over the life of the loan. Before relying on this, confirm your lender applies extra payments to principal (not future payments) and charges no prepayment penalty.

How it works — the formula

Base payment = L · r(1+r)ⁿ / ((1+r)ⁿ − 1)
Each month: interest = balance × r; principal = payment − interest
Extra payment adds directly to principal, ending the loan early.

The loan is amortized month by month; adding to the payment accelerates principal reduction, compounding the interest savings until the balance reaches zero.

Source: CFPB — Owning a Home

Worked examples

Example 1

$200k, 6%, 30 yr, +$200/mo

Inputs:: loan=200000, rate=6, term=30, extra=200
Output:: payoff ~21 yr, saves ~$80k interest

Example 2

$200k, 6%, 30 yr, +$0

Inputs:: loan=200000, rate=6, term=30, extra=0
Output:: 360 months, ~$231,676 interest

Example 3

$30k, 5%, 5 yr, +$100/mo

Inputs:: loan=30000, rate=5, term=5, extra=100
Output:: pays off ~9 months early

Limitations

Assumes a fixed rate and that all extra goes to principal.
Ignores taxes, insurance, escrow, and prepayment penalties.
Monthly compounding; biweekly schedules differ slightly.

Confirm prepayment terms with your lender; not financial advice.

Frequently asked

How do extra payments save interest?+

Interest each month is charged on the remaining balance. Paying extra principal lowers that balance faster, so less interest accrues every subsequent month and the loan ends sooner. The savings compound over the remaining term.

How much can a small extra payment save?+

More than most people expect. On a $200,000, 30-year mortgage at 6%, paying an extra $200 a month pays the loan off about 8 years early and saves roughly $80,000 in interest, because the savings accumulate over decades.

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

Both help; consistent monthly extra payments start saving interest immediately and are easy to automate. A lump sum early in the loan has a large effect because it removes principal when the most interest would otherwise accrue.

Do extra payments lower my monthly payment?+

No — they shorten the term, not the required payment. Your scheduled payment stays the same; you simply finish sooner. If you want a lower payment, you would need to refinance or request a loan recast.

Should I check for a prepayment penalty?+

Yes. Most mortgages have none, but some loans charge a fee for early payoff. Confirm there is no prepayment penalty and that your lender applies extra funds to principal rather than holding them as a prepaid future payment.

Is paying down the loan always the best use of money?+

Not necessarily. Compare the loan's interest rate to what you could earn elsewhere (e.g. investing or higher-rate debt). Paying off a 6% loan is a guaranteed 6% return, but higher-interest debt or employer-matched retirement contributions may take priority.