Early loan payoff calculator
An early payoff (extra monthly payment or a one-time principal reduction) lowers the balance faster. Under French amortization (fixed payment), that usually means less total interest and fewer months. This tool compares the minimum schedule with an accelerated plan.
Pair it with the amortization table, personal loan, and debt payoff tools. To compare nominal vs effective rates, use the effective annual rate (TEA).
With $10,000 at 18% APR, 36 months, and $100 extra each month:
- Contractual payment: $361.52
- Minimum only: 36 months · interest $3,014.89 · total $13,014.89
- Payment + $100: 27 months · interest $2,185.02 · total $12,185.02
- Estimated savings: $829.87 interest and 9 months
With no extras, modeled savings are zero. A $1,000 upfront lump sum (no monthly extra) saves $662.98 interest and 4 months.
Methodology
r = annual rate / 12 / 100
Payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Each month:
- Interest is charged on the outstanding balance.
- The rest of the payment (plus extras) reduces principal.
- The accelerated path stops when the balance hits zero; the final payment is capped so you do not overpay.
Because interest is computed on the balance, every extra dollar to principal lowers the base for later months: so early extras usually beat the same dollars paid near the end.
Worked example (defaults)
- Principal $10,000 · rate 18% · term 36 → payment $361.52
- Scenario A: minimum only → 36 months · interest $3,014.89
- Scenario B: payment + $100 → 27 months · interest $2,185.02
- Difference → 9 months and $829.87 interest
Also try a lump sum (for example $1,000 at the start) with or without monthly extras.
Scenario table (calculator engine)
Values from calculatePagoAnticipadoPrestamo (cent rounding).
| Principal | Rate | Term | Extra/mo | Payment | Months w/ extra | Interest saved | Months saved |
|---|---|---|---|---|---|---|---|
| $10,000 | 18% | 36 | $50 | $361.52 | 31 | $483.67 | 5 |
| $10,000 | 18% | 36 | $100 | $361.52 | 27 | $829.87 | 9 |
| $10,000 | 18% | 36 | $200 | $361.52 | 21 | $1,293.08 | 15 |
| $15,000 | 36% | 24 | $150 | $885.71 | 20 | $1,281.14 | 4 |
| $25,000 | 24% | 48 | $200 | $815.05 | 35 | $4,344.98 | 13 |
| $50,000 | 12% | 60 | $250 | $1,112.22 | 46 | $4,119.60 | 14 |
| $8,000 | 42% | 24 | $100 | $498.18 | 19 | $977.30 | 5 |
Monthly extras vs lump sum ($10,000 · 18% · 36)
| Strategy | Months | Interest | Total paid | Savings vs minimum |
|---|---|---|---|---|
| Minimum only ($361.52) | 36 | $3,014.89 | $13,014.89 | : |
| + $100/mo | 27 | $2,185.02 | $12,185.02 | $829.87 · 9 months |
| $1,000 lump sum | 32 | $2,351.91 | $11,351.91 | $662.98 · 4 months |
| $1,000 + $100/mo | 24 | $1,727.08 | $10,727.08 | $1,287.81 · 12 months |
The lump-sum total paid includes the $1,000 upfront, so “total paid saved” can exceed interest saved alone.
Decision guidance
- Subtract any prepayment penalty from the modeled savings.
- If you hold several debts, prioritize the highest rate (avalanche): pair with debt payoff and credit card payment.
- A small steady extra often beats a one-off lump sum made late.
- Check debt-to-income before locking in an extra that stresses cash flow.
- Compare effective borrowing cost with the effective annual rate.
Some contracts apply extras to lower the payment instead of shortening the term, or charge an early settlement fee. Confirm the application rules before you transfer funds.
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 French amortization model.
A large upfront sum cuts interest immediately; steady extras sustain the effect. On defaults, $100/mo saves $829.87 and 9 months; a $1,000 lump sum saves $662.98 and 4 months. Combine both if you can.
The model adjusts the final payment so you only pay what is needed to clear the loan.
Shorter term usually maximizes interest savings. Lower payment eases the monthly budget but keeps you in debt longer. If cash flow allows, shorter term is typically better.
When prepayment fees are high, when the loan rate is very low versus what you could earn elsewhere, or when a costlier debt (e.g. card revolving) competes for the same dollars.
No. This educational model excludes fees and insurance: subtract any contractual fee from the modeled savings.
It is the nominal French payment from the rate you enter. It does not package fees into APR/TEA: use the effective annual rate to compare effective rates.