Paying off your auto loan early can lead to significant savings in interest and a quicker path to vehicle ownership. This calculator helps you estimate these benefits by comparing your current loan's projected interest payments to what you would pay with additional monthly contributions.
How the Calculator Works:
The calculator uses standard loan amortization formulas to first determine your original loan's monthly payment and total interest. Then, it recalculates the amortization schedule with your specified extra monthly payment. By comparing the total interest paid in both scenarios, it reveals the amount of interest you save and how much sooner you can expect to pay off your loan.
Key Components:
Original Loan Amount: The initial principal borrowed for the vehicle.
Annual Interest Rate: The yearly percentage charged on the outstanding loan balance.
Original Loan Term (Months): The total number of months over which the loan was initially scheduled to be repaid.
Months Already Paid: The number of payments you have already made towards the loan. This helps determine the current outstanding balance and remaining term.
Monthly Extra Payment: The additional amount you plan to pay each month towards the principal beyond your regular monthly payment.
The Math Behind the Savings:
The calculator performs the following calculations:
Calculate Original Monthly Payment (P): Using the loan principal (L), monthly interest rate (i), and total number of payments (n). The formula is:
P = L [ i(1 + i)^n ] / [ (1 + i)^n – 1]
where i = Annual Interest Rate / 12.
Calculate Remaining Balance: The calculator determines the outstanding balance after paymentMonthsElapsed.
Calculate New Amortization with Extra Payment: A new loan amortization schedule is generated using the remaining balance as the new principal, the same interest rate, and the original number of remaining months, but with the adjusted higher monthly payment (Original Payment + Extra Payment).
Calculate Total Interest Saved: The sum of all scheduled interest payments on the original loan (from the current point forward) minus the sum of all actual interest payments with the extra payments.
Calculate Payoff Time Reduction: The difference between the original remaining term and the new, shorter term calculated with the extra payments.
Why Pay Off Your Auto Loan Early?
Save Money: The most direct benefit is reducing the total amount of interest you pay over the life of the loan. Even small extra payments can add up significantly.
Become Debt-Free Sooner: Owning your car outright provides financial freedom and can improve your credit utilization ratio.
Reduce Financial Burden: Eliminating a monthly car payment frees up cash flow for other financial goals like saving, investing, or other purchases.
Peace of Mind: Not having a car payment can reduce financial stress, especially during uncertain economic times.
Disclaimer: This calculator provides an estimate based on the inputs provided. Actual savings may vary due to factors like exact payment dates, lender rounding practices, and potential changes in your payment schedule. Consult with your lender for precise figures.
function calculateEarlyPayoff() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermMonths = parseInt(document.getElementById("loanTermMonths").value);
var paymentMonthsElapsed = parseInt(document.getElementById("paymentMonthsElapsed").value);
var extraPayment = parseFloat(document.getElementById("extraPayment").value);
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(loanTermMonths) || loanTermMonths <= 0 ||
isNaN(paymentMonthsElapsed) || paymentMonthsElapsed < 0 ||
isNaN(extraPayment) || extraPayment = loanTermMonths) {
alert("Months already paid cannot be more than or equal to the original loan term.");
return;
}
var monthlyInterestRate = interestRate / 100 / 12;
// — Calculate Original Monthly Payment —
var originalMonthlyPayment = 0;
if (monthlyInterestRate > 0) {
originalMonthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths)) / (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1);
} else {
originalMonthlyPayment = loanAmount / loanTermMonths;
}
// — Calculate Remaining Balance —
var remainingBalance = 0;
if (monthlyInterestRate > 0) {
remainingBalance = loanAmount * Math.pow(1 + monthlyInterestRate, paymentMonthsElapsed) – originalMonthlyPayment * (Math.pow(1 + monthlyInterestRate, paymentMonthsElapsed) – 1) / monthlyInterestRate;
} else {
remainingBalance = loanAmount – (originalMonthlyPayment * paymentMonthsElapsed);
}
// Ensure remaining balance is not negative due to potential floating point inaccuracies
remainingBalance = Math.max(0, remainingBalance);
var originalRemainingMonths = loanTermMonths – paymentMonthsElapsed;
// — Calculate Original Total Interest from current point forward —
var originalTotalInterestRemaining = 0;
var tempBalance = remainingBalance;
var tempRemainingMonths = originalRemainingMonths;
var currentInterestRate = monthlyInterestRate;
for (var i = 0; i < tempRemainingMonths; i++) {
var interestForMonth = tempBalance * currentInterestRate;
originalTotalInterestRemaining += interestForMonth;
tempBalance -= (originalMonthlyPayment – interestForMonth);
if (tempBalance <= 0) break; // Stop if balance is paid off
}
// Adjust if the last payment was slightly over, to not include negative principal
if (tempBalance 0) {
monthsCount++;
var interestForMonth = currentNewBalance * monthlyInterestRate;
var principalForMonth = newMonthlyPayment – interestForMonth;
// Adjust last payment if it overpays the principal
if (principalForMonth > currentNewBalance) {
principalForMonth = currentNewBalance;
interestForMonth = currentNewBalance * monthlyInterestRate; // Recalculate interest based on remaining principal
newMonthlyPayment = principalForMonth + interestForMonth; // The final payment is exactly what's left
}
newTotalInterestPaid += interestForMonth;
currentNewBalance -= principalForMonth;
if (monthsCount > 1000) { // Prevent infinite loops for edge cases
alert("Calculation could not be completed. Please check your inputs.");
return;
}
}
newMonthsToPayoff = monthsCount;
var totalInterestSaved = originalTotalInterestRemaining – newTotalInterestPaid;
var payoffTimeReduction = originalRemainingMonths – newMonthsToPayoff;
// Display results
document.getElementById("totalInterestSaved").innerText = "$" + totalInterestSaved.toFixed(2);
document.getElementById("payoffTimeReduction").innerText = payoffTimeReduction + " months";
// Calculate new payoff date (approximate)
var today = new Date();
var newPayoffDate = new Date(today.getFullYear(), today.getMonth() + newMonthsToPayoff, today.getDate());
var options = { year: 'numeric', month: 'long', day: 'numeric' };
document.getElementById("newPayoffDate").innerText = newPayoffDate.toLocaleDateString(undefined, options);
// Highlight savings
if (totalInterestSaved > 0) {
document.getElementById("totalInterestSaved").style.color = "#28a745";
} else {
document.getElementById("totalInterestSaved").style.color = "#dc3545"; // Red if no savings or negative
}
}