Extra Payment / Loan Payoff Calculator

Paying a little extra each month is the most reliable way to leave debt behind, and the effect is bigger than the arithmetic suggests. Every extra dollar goes straight at the principal, so it stops attracting interest immediately and every future month costs less. That compounding works in your favour in exactly the way it usually works against you. The two numbers to watch are time saved and interest avoided. On a credit card charging eighteen per cent with a twenty-thousand-dollar balance, the interest saved by adding a hundred dollars a month runs into thousands and shortens the payoff by years. The higher the rate, the more the extra is worth, which is why clearing expensive debt beats investing spare cash at a lower expected return. Where you send the extra matters. If a single account charges the highest rate, sending everything there first is mathematically cheapest — the avalanche method. If motivation is the problem, clearing the smallest balance first gives quicker wins and often keeps people going, which wins more often in practice than it loses in maths. Either way, always pay at least the minimum on every account so no penalty rate or late fee appears. One caveat applies to mortgages and other fixed instalment loans: confirm your lender applies extra payments to principal rather than treating them as an early instalment for next month. Most do when you mark the payment clearly, but it is worth checking, because a prepayment that merely advances the schedule saves nothing until the loan ends. This calculator shows the payoff time and total interest with your current payment and with the extra added, side by side, so the saving is concrete. It assumes a fixed rate and a constant payment with no new charges, and it ignores any prepayment penalties, so check your agreement before making large extra payments.

This calculator returns estimates for general information only. It is not financial, investment, tax or legal advice, and it cannot replace guidance from a qualified professional who knows your circumstances. Figures such as loan payments, investment growth and retirement projections are simplified models based on the inputs and assumptions you provide, not guarantees of future results.