Is early payoff worth it?
An early payoff (extra monthly payment or a one-time principal reduction) lowers the balance faster. Under French amortization, that usually means less total interest and fewer months. This tool compares the minimum schedule with an accelerated plan.
If you pay more than the contractual installment each month—or make an upfront lump sum—the model estimates how many months and how much interest you save versus minimum payments only.
Methodology
r = annual rate / 12 / 100
Payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Each month interest is charged on the balance; the rest of the payment (plus extras) reduces principal until the balance is zero.
Worked example
$10,000 · 18% APR · 36 months · $100 extra per month
- Compute the contractual payment for the original term.
- Scenario A: minimum payment only.
- Scenario B: payment + $100 → fewer months and lower interest.
- The difference is your estimated savings.
Also try a lump sum (for example $1,000 at the start) with or without monthly extras.
Decision guidance
- Subtract any prepayment penalty from the modeled savings.
- If you hold several debts, prioritize the highest rate (avalanche).
- Pair this with the amortization table and debt payoff tools.
Limits
- Excludes fees, insurance, APR packaging, and non-standard compounding.
- Assumes a fixed nominal rate and end-of-month payments.
- Educational only—not credit advice or a loan offer.
FAQ
Yes. After monthly interest is covered, extras reduce principal in this model.
A large upfront sum cuts interest immediately; steady extras compound the effect. Compare both here.