Loan Payoff Calculator
See how fast you can be debt-free and how much interest extra payments will save you.
Your numbers
Debt-free in
- Original balance
- $12,000.00
- Total interest
- −$6,200.00
- Total paid
- $18,200.00
When you carry a balance, two numbers decide your fate: how long until it's gone, and how much interest you pay along the way. Both depend heavily on your monthly payment — and small increases have a surprisingly large effect. This guide explains how payoff time is calculated and why extra payments are the most powerful lever you have.
How payoff time is calculated
Each month, interest is added to your balance and your payment chips away at the rest. The number of months to clear a balance is:
n = −log(1 − (B · r) ⁄ P) ⁄ log(1 + r)
where B is the balance, r is the monthly rate (APR ÷ 12), and P is the monthly payment.
Take a $12,000 balance at 19.99% APR paying $350/month. That clears in about 52 months (4 years, 4 months) and costs roughly $6,200 in interest — more than half the original balance again.
Why the minimum payment is a trap
The first month's interest on that balance is about $200. If your payment is only a little above that — say $250 — almost nothing goes to principal, so the balance barely moves and the payoff stretches for years. If the payment is below the monthly interest, the balance actually grows and the loan never pays off. The calculator above warns you when that happens.
The power of extra payments
Because extra money goes entirely to principal, it compounds in your favor. On the same $12,000 balance, adding just $100/month (to $450) clears it in about 36 months instead of 52 — and saves roughly $2,000 in interest. You paid in an extra $100 a month for three years and got back far more in avoided interest.
Snowball vs. avalanche (for multiple debts)
If you have several balances:
- Avalanche — put extra money on the highest-APR debt first. Mathematically optimal; saves the most interest.
- Snowball — pay off the smallest balance first for a quick psychological win, then roll that payment into the next.
Both work; pick the one you'll actually stick with.
The bottom line
Pay as far above the interest charge as you can — that's where payoff speed comes from. Use the calculator to see how an extra $50 or $100 a month changes your debt-free date and total interest, and on multiple debts, target the highest APR first.
Frequently asked questions
How long will it take to pay off my loan?
It depends on your balance, APR, and monthly payment. For example, $12,000 at 19.99% APR paid at $350/month clears in about 52 months. Enter your numbers above to see your exact payoff date.
Why does my balance barely go down each month?
Because most of a low payment goes to interest first. On a $12,000 balance at 19.99%, the first month’s interest alone is about $200 — so a $250 payment only reduces the balance by ~$50. Raising the payment dramatically speeds things up.
How much do extra payments save?
A lot, because extra money goes entirely to principal. Adding $100/month to a $12,000 balance at 19.99% cuts payoff from ~52 to ~36 months and saves roughly $2,000 in interest.
What happens if my payment is less than the interest?
The balance grows instead of shrinking — the loan never pays off. This is called negative amortization. The calculator warns you when your payment doesn’t cover the monthly interest so you can increase it.
Should I pay off the highest interest or smallest balance first?
The avalanche method (highest APR first) saves the most money. The snowball method (smallest balance first) gives quicker wins and motivation. Both work — choose the one you’ll stick with.
Is it better to pay off debt or invest?
Generally, pay off high-interest debt (like credit cards at 15–25%) before investing, since few investments reliably beat that guaranteed return. For low-interest debt, investing may win. Compare the APR to your expected return.
How is credit card interest calculated?
Card interest is usually charged on your average daily balance using a daily rate (APR ÷ 365), then billed monthly. This calculator approximates it with a monthly rate (APR ÷ 12), which is close enough for planning payoff.
Does paying off a loan early save money?
Yes — on most loans, paying early reduces the interest you’ll owe because interest accrues on the remaining balance. Check for any prepayment penalty first (rare on credit cards, occasional on some loans).