Calculate how much sooner you can pay off your loan by making extra payments.
Your Loan Payoff Details
Enter loan details above to see your savings.
Understanding the Power of Additional Payments
Making extra payments on your loan, whether it's a mortgage, auto loan, or personal loan, is one of the most effective ways to reduce the total interest paid and shorten the loan's lifespan. Our Additional Payment Calculator helps you visualize this impact by showing you how much time and money you can save.
How the Calculator Works
The calculator uses your original loan details (loan amount, interest rate, and term) to first determine your standard monthly payment. It then incorporates your specified monthly additional payment to recalculate the loan's payoff timeline and the total interest saved.
Key Calculations:
Standard Monthly Payment Calculation: The calculator first determines your regular monthly payment using the standard loan payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
Recalculating with Additional Payment: With the additional payment, the total monthly outflow becomes (Standard Monthly Payment + Additional Payment). The calculator then iteratively calculates the remaining balance month by month, considering the interest accrued on the remaining balance and the new, higher total monthly payment. This process continues until the loan balance reaches zero.
Total Interest Saved: This is calculated by comparing the total amount paid over the original loan term (Standard Monthly Payment * Original Number of Payments) with the total amount paid when making additional payments (Total of all monthly payments until payoff).
Time Saved: This is the difference between the original loan term (in months or years) and the new, shortened term calculated with the extra payments.
Why Make Additional Payments?
Save on Interest: A significant portion of your early loan payments goes towards interest. By paying down the principal faster, you reduce the base upon which future interest is calculated, leading to substantial savings over time.
Become Debt-Free Sooner: Imagine shaving years off your mortgage or car loan. This frees up your cash flow for other financial goals like investing, saving for retirement, or making a large purchase.
Improve Your Financial Health: Reducing debt is a cornerstone of strong personal finance. It lowers your debt-to-income ratio, can improve your credit score, and provides peace of mind.
Tips for Making Additional Payments
Be Consistent: Even small, consistent additional payments can make a big difference.
Specify Application: When making an extra payment, clearly instruct your lender to apply it directly to the principal balance. If not specified, they may apply it to the next month's payment, which negates the benefit of paying down principal faster.
Round Up Payments: A simple strategy is to round up your regular payment to the nearest $50 or $100.
Occasional Lump Sums: Use windfalls like tax refunds, bonuses, or inheritances to make a lump-sum principal payment.
Use this calculator as a motivational tool to see how accelerating your loan payments can significantly boost your financial freedom.
function calculateLoanPayoff() {
var loanAmount = parseFloat(document.getElementById('loanAmount').value);
var annualInterestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseInt(document.getElementById('loanTerm').value);
var additionalPayment = parseFloat(document.getElementById('additionalPayment').value);
var resultMessageElement = document.getElementById('resultMessage');
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(additionalPayment) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0 || additionalPayment < 0) {
resultMessageElement.innerText = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
// Calculate standard monthly payment
var standardMonthlyPayment;
if (monthlyInterestRate === 0) {
standardMonthlyPayment = loanAmount / numberOfPayments;
} else {
standardMonthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
var totalMonthlyPayment = standardMonthlyPayment + additionalPayment;
// Recalculate loan term with additional payments
var remainingBalance = loanAmount;
var monthsToPayoff = 0;
var totalPaidWithExtra = 0;
if (totalMonthlyPayment 0) {
resultMessageElement.innerText = "Additional payment is too small to accelerate payoff. It must be greater than $0 to show an effect.";
return;
}
while (remainingBalance > 0) {
monthsToPayoff++;
var interestForMonth = remainingBalance * monthlyInterestRate;
var principalForMonth = totalMonthlyPayment – interestForMonth;
// Ensure principal payment doesn't exceed remaining balance
if (principalForMonth > remainingBalance) {
principalForMonth = remainingBalance;
totalMonthlyPayment = interestForMonth + remainingBalance; // Final payment adjustment
}
remainingBalance -= principalForMonth;
totalPaidWithExtra += totalMonthlyPayment;
// Safety break for extremely long calculations or edge cases
if (monthsToPayoff > numberOfPayments * 5) { // Arbitrary limit, 5x original term
resultMessageElement.innerText = "Calculation exceeded safety limit. Please check your inputs.";
return;
}
}
var totalPaidStandard = standardMonthlyPayment * numberOfPayments;
var totalInterestSaved = totalPaidStandard – (totalPaidWithExtra – additionalPayment * monthsToPayoff) – (additionalPayment * monthsToPayoff);
// Correct calculation for total interest saved:
// Total interest paid with extra = totalPaidWithExtra – loanAmount
// Total interest paid standard = totalPaidStandard – loanAmount
// Interest saved = (totalPaidStandard – loanAmount) – (totalPaidWithExtra – loanAmount)
// Interest saved = totalPaidStandard – totalPaidWithExtra
var interestSaved = totalPaidStandard – totalPaidWithExtra;
var originalTermMonths = numberOfPayments;
var newTermMonths = monthsToPayoff;
var yearsSaved = Math.floor((originalTermMonths – newTermMonths) / 12);
var monthsSaved = (originalTermMonths – newTermMonths) % 12;
var formattedInterestSaved = interestSaved.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedTotalPaidWithExtra = totalPaidWithExtra.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedStandardMonthlyPayment = standardMonthlyPayment.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedAdditionalPayment = additionalPayment.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedTotalPaidStandard = totalPaidStandard.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var message = "Original Loan Details:";
message += "Standard Monthly Payment: $" + formattedStandardMonthlyPayment + "";
message += "Original Payoff Time: " + loanTermYears + " years (" + originalTermMonths + " months)";
message += "Total Paid (Standard): $" + formattedTotalPaidStandard + "";
message += "With Extra Payments:";
message += "New Total Monthly Payment: $" + (standardMonthlyPayment + additionalPayment).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "";
message += "New Payoff Time: " + yearsSaved + " years and " + monthsSaved + " months (" + newTermMonths + " months)";
message += "Total Paid (with extra): $" + formattedTotalPaidWithExtra + "";
message += "Savings:";
message += "Time Saved: " + (yearsSaved > 0 ? yearsSaved + " year" + (yearsSaved !== 1 ? "s" : "") : "") + (monthsSaved > 0 ? (yearsSaved > 0 ? ", " : "") + monthsSaved + " month" + (monthsSaved !== 1 ? "s" : "") : "") + "";
message += "Total Interest Saved: $" + formattedInterestSaved + "";
resultMessageElement.innerHTML = message;
}