1. What is the Extra Payment Loan Payoff Calculator?

This calculator estimates how much faster you can pay off your loan by making extra payments. It shows the time savings and interest reduction from paying more than your minimum monthly payment.

2. How Does the Calculator Work?

The calculator uses the loan payoff equation:

Where:

• \( P \) — Principal balance ($)
• \( D \) — Monthly payment ($)
• \( E \) — Extra payment ($)
• \( R \) — Monthly interest rate (APR / 12)
• \( T \) — Time to payoff (months)

Explanation: The equation calculates how many months it will take to pay off the loan when making regular payments plus extra payments, accounting for compound interest.

3. Importance of Extra Payments

Details: Making extra payments can significantly reduce both the time to pay off your loan and the total interest paid. Even small additional payments can have a big impact over time.

4. Using the Calculator

Tips: Enter your current loan balance, regular monthly payment amount, the extra amount you can pay each month, and your annual interest rate (APR). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments save me?
A: Depending on your loan terms, extra payments can save thousands in interest and cut years off your repayment period.

Q2: Should I pay extra principal or save instead?
A: Compare your loan interest rate to potential investment returns. Paying down high-interest debt usually provides better returns than savings.

Q3: Are there prepayment penalties?
A: Most loans don't have prepayment penalties, but check your loan agreement to be sure.

Q4: Is it better to make biweekly payments?
A: Making half-payments every two weeks results in 26 half-payments (13 full payments) per year, which can help pay off your loan faster.

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual results may vary slightly due to rounding in real loan payments or if your interest rate changes.