Loan Payoff Calculator

A $12,000 balance at 19.99% APR paid at $350 a month takes 52 months to clear, 4 years and 4 months, and costs about $6,200 in interest. Raise the payment to $450 and it clears in 36 months for roughly $4,200. Same debt, same rate. One extra hundred dollars a month bought back 16 months and about $2,000.

That is the whole subject in miniature. Everything below is the arithmetic behind it, how to run it backwards to work out how much you can afford to borrow, and what actually differs between a student loan, a home equity loan, a business loan, a hard money loan and a balloon note, because the math is identical and the terms are not.

How long will it take to pay off my loan?

Each month, interest is added to the balance and your payment clears that interest first. Whatever is left over reduces the principal. 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.

Worked through on the headline example, $12,000 at 19.99% APR paying $350 a month:

• Monthly rate: 19.99% ÷ 12 ÷ 100 = 0.01665833
• First month's interest: $12,000 × 0.01665833 = $199.90
• (B · r) ÷ P: $199.90 ÷ $350 = 0.571143
• 1 − 0.571143 = 0.428857, and log(0.428857) = −0.846631
• log(1 + 0.01665833) = 0.016521
• n = 0.846631 ÷ 0.016521 = 51.25, rounded up to 52 payments

Only $150.10 of that first $350 payment touched the principal. The rest was rent on money you already owe. That ratio improves every month as the balance falls, which is why the back half of a loan goes so much faster than the front half feels like it will.

Two notes on precision. The Loan Payoff Calculator rounds up to a whole number of months and treats every payment including the last as a full one, so the total interest it reports is a little higher than you will actually pay. Run to the cent, the $12,000 example is 51.25 payments and about $5,936 of interest, with a small final payment instead of a full $350. Plan around the calculator's figure and you will finish a little early and a little cheaper, which is the right direction to be wrong in.

How is a loan payment calculated?

The payoff formula above assumes you already know the payment. A lender works the other way: it fixes the term, then solves for the payment that clears the loan in exactly that many months.

P = B · r ⁄ (1 − (1 + r)^−n)

Same three letters, rearranged. Take $20,000 over 60 months at an illustrative 9% APR:

• r = 9% ÷ 12 = 0.0075
• (1 + 0.0075)^−60 gives 1 ÷ 1.565681, so 1 − that = 0.361300
• P = ($20,000 × 0.0075) ÷ 0.361300 = $150 ÷ 0.361300 = $415.17 a month
• Total repaid: $415.17 × 60 = $24,910, of which $4,910 is interest

Every fixed-rate installment loan in this guide uses that one formula. A car loan, a personal loan, a student loan on the standard schedule, a home equity loan and a mortgage differ in term, security and rate, not in method. Use whatever rate your own offer letter quotes, not an example rate from a web page, including this one.

The payoff calculator on this page takes a payment and returns a term. To go from a term to a payment for a house, use the Mortgage Calculator; for a vehicle, the Auto Loan Calculator.

How much loan can I afford?

Almost nobody actually wants to know what a $30,000 loan costs. They want to know how big a loan a payment they can genuinely carry will support. That is the same formula solved for B:

B = P · (1 − (1 + r)^−n) ⁄ r

Say you can comfortably commit $400 a month for 60 months, and your best quote is 9% APR:

• (1 − (1 + 0.0075)^−60) ÷ 0.0075 = 48.173374
• B = $400 × 48.173374 = $19,269

So $400 a month for five years supports a loan of roughly $19,269, and you will hand over $24,000 in total to borrow it. Here is the same calculation across payments and terms, all at an illustrative 9% APR. Substitute your own quoted rate before you rely on any of it.

Monthly payment	36 months	48 months	60 months	84 months
$200	$6,289	$8,037	$9,635	$12,431
$300	$9,434	$12,055	$14,452	$18,646
$400	$12,579	$16,074	$19,269	$24,862
$500	$15,723	$20,092	$24,087	$31,077
$600	$18,868	$24,111	$28,904	$37,292
$750	$23,585	$30,139	$36,130	$46,615

Read across any row and the temptation is obvious: stretching from 36 to 84 months nearly doubles what you can borrow on the same payment. What it does to the interest is worse than proportional. At $400 a month, the 36-month loan costs $1,821 in interest and the 84-month loan costs $8,738, nearly five times as much, and on anything that depreciates it also leaves you owing more than the asset is worth for years. The term is not free borrowing capacity. It is a price.

Read down the rate instead and you get the case for shopping the loan. At $400 a month over 60 months:

APR	Loan you can support
6%	$20,690
7%	$20,201
8%	$19,727
9%	$19,269
10%	$18,826
12%	$17,982
15%	$16,814

The spread between 6% and 15% is $3,876 of borrowing power on an identical monthly commitment. One extra quote is usually worth more than any amount of budgeting.

To check an answer against this page's calculator, work in the other direction: enter the loan amount you think you can afford as the balance, your APR, and the payment you can carry. If it clears inside the term you had in mind, the number is affordable. If it runs long, come down.

One caution on the word afford. This arithmetic tells you what a payment supports, not what your budget supports. Lenders look at total debt against income, and a payment that fits on paper alongside rent, an existing car loan and a card balance may not fit in practice. Add up every existing monthly obligation first, then see what is genuinely left.

How much do extra payments save?

Because every extra dollar arrives after the interest has already been charged, it goes entirely to principal. That is why the returns are so lopsided. Same $12,000 at 19.99% APR:

Monthly payment	Months to clear	Total interest	Total paid
$250	98	$12,500	$24,500
$300	67	$8,100	$20,100
$350	52	$6,200	$18,200
$400	42	$4,800	$16,800
$450	36	$4,200	$16,200
$500	31	$3,500	$15,500
$600	25	$3,000	$15,000
$750	19	$2,250	$14,250

Compare the first and last rows. Tripling the payment from $250 to $750 cuts the interest from $12,500 to $2,250, an 82% reduction, and the payoff from eight years to nineteen months. At $250 a month you repay more than double what you borrowed. At $750 you repay $14,250 on a $12,000 debt.

The first increment is the most valuable one. Going from $250 to $300, fifty dollars a month, saves $4,400 in interest and 31 months. Going from $600 to $750, a bigger increase in dollar terms, saves $750 and six months. The lower your payment sits relative to the interest charge, the more each extra dollar is worth, which is exactly the opposite of how it feels.

Enter your own numbers above and put the increase in the extra monthly payment field. The calculator holds your base payment constant and reports both the interest saved and the months saved against it. How to pay off a loan faster covers where to find the extra money in the first place.

What happens if my payment is less than the interest?

The balance grows. On $12,000 at 19.99%, the first month's interest is $199.90, so a $180 payment leaves the balance $19.90 higher than it started and higher again the month after. This is negative amortization, and the loan never pays off at that payment no matter how long you keep going. The calculator detects it and tells you plainly rather than returning a number.

Just above that line is nearly as bad. A $250 payment clears the interest by only $50.10 in month one, which is why it takes 98 months to clear a $12,000 balance. Payoff speed comes from the gap between your payment and the monthly interest charge, not from the payment itself. Two people paying $400 a month against the same balance at 8% and 24% APR are not doing remotely the same thing.

The same trap runs hardest on revolving credit, where the required minimum is usually recalculated as a small percentage of the balance and therefore falls as the balance falls, extending the payoff indefinitely. The Credit Card Payoff Calculator models that specific behavior.

Student loan payment calculator: what is different about student debt

The standard repayment schedule on a student loan is an ordinary amortizing loan and uses the formula above. $28,000 at an illustrative 6% over the standard 120 months is $310.86 a month, $37,303 repaid, $9,303 of interest. What makes student debt behave differently is everything around that schedule.

Federal and private loans are not the same product. Federal loans carry fixed rates set by statute for the year they were disbursed, and come with deferment, forbearance and income-driven repayment options. Private student loans are ordinary consumer credit, often variable rate, and carry none of that. Before you model anything, check which of yours are which, because a plan that works on one can be unavailable on the other.

Income-driven plans are not amortization. On an income-driven plan the payment is set from your income rather than from the balance and term, so this calculator cannot reproduce it. On those plans the payment can be smaller than the accruing interest, which means the balance grows even while you pay, the negative amortization case above. That can still be the right choice if forgiveness is the endpoint, but you should know that is the trade you are making rather than discover it.

An extra payment has to be directed at principal. This is the one that costs people real money. Servicers commonly apply anything above the required amount to future installments, advancing your due date rather than reducing what you owe. It feels like progress, it saves you nothing, and interest keeps accruing on the same balance. Send written instructions to apply overpayments to the principal of the highest-rate loan in the group, and check the next statement to confirm it happened. Most servicers have a standing instruction setting.

Your balance is usually several loans, not one. Each year of study is typically a separate loan with its own rate. Model the highest-rate one separately rather than averaging, because that is where extra payments belong.

Once the extra payment does land on principal, the effect is the usual one. On the $28,000 example:

Monthly payment	Months to clear	Total interest	Interest saved
$310.86 (standard)	120	$9,303	-
$360.86 (+$50)	99	$7,725	$1,578
$410.86 (+$100)	84	$6,512	$2,791
$510.86 (+$200)	65	$5,206	$4,097

An extra $100 a month clears the loan three years early and saves about $2,791. Note also that at 6% the first month's interest is only $140 of the $310.86 payment, so student debt at typical federal rates responds to extra payments far less dramatically than card debt at 20% does. If you carry both, the card wins every time.

Personal loan calculator: fixed amount, fixed term, fixed payment

An unsecured personal loan is the plain case the formulas were written for. A fixed sum arrives, a fixed rate applies, and a fixed payment clears it over a fixed term. Nothing is pledged as security, which is why the rate is higher than on anything backed by a house or a car, and why approval turns almost entirely on your credit profile and income.

Three things to check on the offer before you model it:

The origination fee. Many personal lenders deduct a fee from the proceeds. Borrow $20,000 with a 3% fee and you receive $19,400 while repaying the full $20,000 schedule. The stated APR is supposed to include it, but the amount you can actually spend is the number that matters when you are deciding how much to borrow.

Whether there is a prepayment penalty. Most reputable personal lenders have none, but confirm it, because the whole extra-payment strategy depends on it.

Fixed or variable. A fixed rate means the payment in the table is the payment for the life of the loan. A variable rate means today's number is an estimate.

For a personal loan you have already taken out, enter the current balance, the APR from your statement and your actual payment above. For one you are considering, use the affordability table to sanity-check the size against a payment you can carry.

Home equity loan calculator: a lump sum secured against your house

A home equity loan is a second mortgage. You borrow a lump sum against the equity in your home, at a fixed rate, over a fixed term, and the house is the security. That security is the entire reason the rate is lower than on an unsecured loan, and it is also the entire risk: default is a foreclosure question, not a collections question.

The payment is the standard amortization calculation. $50,000 at an illustrative 8%:

Term	Monthly payment	Total interest
120 months (10 years)	$606.64	$22,797
180 months (15 years)	$477.83	$36,009

Stretching from 10 to 15 years drops the payment by $128.81 and adds $13,212 of interest. On a second mortgage that difference is usually larger than people expect, because the balances are large and the terms are long.

A HELOC is a different product with the same collateral. A home equity loan hands you the whole sum on day one and amortizes from the first payment. A home equity line of credit gives you a revolving limit you draw against during a draw period, typically at a variable rate, and during that period the required payment is often interest only. On $50,000 at 8% that is $333.33 a month, and at the end of ten years of paying it you still owe $50,000. When the draw period ends the balance converts to an amortizing repayment period, and the payment jumps to $477.83 if that period is 15 years. That step up is the single most common shock in home equity borrowing, and it is entirely predictable in advance.

So: lump sum with a known payoff date, use a home equity loan and model it above. Uncertain amount drawn over time, a HELOC is more flexible but you are accepting a variable rate and a payment increase you should calculate now. If what you are really weighing is restructuring the first mortgage instead, the Refinance Calculator compares that properly, and is refinancing worth it covers when it is not.

Home improvement loan calculator: which shape of financing fits the job

Home improvement loan is a use, not a product. The same kitchen gets financed four different ways, and the one with the lowest monthly payment is usually the most expensive. A $25,000 project, with illustrative rates:

Financing	Rate	Term	Monthly payment	Total interest
Unsecured personal loan	12%	60 months	$556.11	$8,367
Unsecured personal loan	9%	84 months	$402.23	$8,787
Home equity loan	8%	120 months	$303.32	$11,398
Home equity loan	8%	180 months	$238.91	$18,004

The bottom row has the lowest payment by a wide margin and costs $9,637 more than the top row. A lower rate over a longer term is not a cheaper loan, it is a cheaper month. That is the single most useful thing to understand before signing anything for a renovation.

How to choose between them in practice:

• Unsecured personal loan. Fast, no appraisal, no lien on the house, higher rate. Best for smaller projects and for anyone who does not want the home pledged against a bathroom.
• Home equity loan or HELOC. Lower rate, longer terms, but it is secured against the house and involves appraisal and closing costs. Best for large structural work where the amount is genuinely big enough to justify the process.
• Cash-out refinance. Replaces the whole first mortgage. Only sensible if the new rate on the entire balance stands up on its own, which the Refinance Calculator will tell you.
• Contractor or retailer financing. Sometimes genuinely zero interest for a promotional period, sometimes deferred interest that becomes retroactively payable in full if any balance remains at the end. Read which one it is. The difference is enormous.
• A credit card. Almost never, unless you are clearing it inside a genuine 0% promotional window. Run the balance through the Credit Card Payoff Calculator first and look at the total.

Whichever you pick, put the resulting balance, rate and payment into the calculator above and look at the total paid, not the monthly figure. That is the number the contractor's financing brochure will not show you.

Business loan calculator: term loans, lines of credit, and the quoted rate that is not the real rate

A business term loan amortizes exactly like a consumer loan. $50,000 at an illustrative 11% over 60 months is $1,087.12 a month and $65,227 repaid. The complication in business lending is not the schedule, it is that the headline number you are quoted frequently is not the cost of the money.

Term loan versus line of credit. A term loan is a lump sum on a fixed schedule and is what this calculator models. A revolving line of credit lets you draw and repay repeatedly, charges interest only on the drawn balance, and usually carries a variable rate plus an annual or unused-line fee. Use a term loan for a known one-off cost such as equipment. Use a line for working capital timing, stock ahead of a season, a gap between invoicing and payment.

Origination fees change the real rate. Take that $50,000 at 11% over 60 months with a 3% origination fee deducted from the proceeds. You repay $1,087.12 a month as scheduled, but you only ever received $48,500. Solve for the rate that makes $48,500 today equal to 60 payments of $1,087.12 and the effective cost is about 12.34% APR, not 11%. The fee added 1.34 points. Always model against cash received, not the face amount.

Factor rates are not interest rates. Merchant cash advances and some short-term business lenders quote a factor rate instead. A factor of 1.3 on a $50,000 advance means you repay $65,000, a cost of $15,000, and that is the whole cost regardless of how quickly you repay. That sounds like 30%. It is not. If the repayment runs over 12 months, the annualized cost is roughly 51%, because you are paying back continuously while the full charge was set on day one. Over six months it is closer to 97%. Most of these products also debit daily or weekly rather than monthly, which pushes the effective figure higher still. To compare one honestly against a term loan, work out the total repaid and the number of months, then convert to an equivalent APR before you decide.

Personal guarantees. Most small business lending is personally guaranteed. The business borrows, you repay. Factor that into any comparison against financing that is genuinely non-recourse.

Hard money loan calculator: short term, asset backed, points up front

A hard money loan is short-term financing from a private lender, secured by property and underwritten mainly on the value of that property rather than on the borrower's income. Real estate investors use it to buy and renovate quickly, then refinance into conventional financing or sell. It is a bridge, not a mortgage, and modeling it like a mortgage produces a badly wrong answer.

Four features change the arithmetic:

• The term is months, not decades. Typically somewhere between 6 and 24 months.
• Payments are usually interest only. The principal does not amortize at all, so the balance on the last day equals the balance on the first.
• The whole principal is due as a lump sum at the end. You repay it from a sale or a refinance. If neither lands on time, you are negotiating an extension, usually for another fee.
• Points are charged up front. A point is 1% of the loan amount, paid at closing, on top of the interest.

Worked through on a $150,000 loan at an illustrative 11% interest only for 12 months, with 2 points:

• Monthly interest: $150,000 × 11% ÷ 12 = $1,375
• Twelve months of that: $16,500
• Points: 2% × $150,000 = $3,000, paid at closing
• Total finance cost for the year: $19,500, which is 13.0% of the amount borrowed
• Due at the end of the term: the full $150,000 principal, unchanged

Points are what makes hard money so sensitive to how long you hold it. The same $3,000 charge spread over six months instead of twelve doubles its annualized weight. A deal that pencils at twelve months can stop working at eighteen, so the exit plan and its timing matter more than the rate.

This page's calculator assumes an amortizing loan and is not the right tool for an interest-only bridge. For hard money, add the interest for each month you expect to hold the loan, add the points, and treat the principal as a separate lump sum at the end.

What is a partially amortized loan?

A partially amortized loan calculates the payment on one schedule and ends the loan on a shorter one. You make payments sized as though the loan ran 30 years, but the full remaining balance falls due after, say, seven. That final lump is the balloon payment. Commercial mortgages and owner-financed deals use this shape constantly.

$200,000 at an illustrative 8%, payments calculated on a 360-month schedule, balance due after 84 payments:

Component	Amount
Monthly payment (on the 30 year schedule)	$1,467.53
Paid in over 7 years	$123,272
Principal actually repaid	$15,045
Interest paid	$108,227
Balloon due in month 84	$184,955

Seven years and $123,272 of payments later, you still owe 92% of what you borrowed. That is not a defect, it is the design: the payment was only ever sized to cover a 30-year pace of principal reduction, and you stopped at year seven. Fully amortizing the same $200,000 over 84 months would have required $3,117.24 a month, more than double.

The trade is explicit. A partially amortized loan buys a low payment now and creates a single large obligation on a known date. It works when you are confident of a sale or a refinance before that date, and it fails badly when you are not, because refinancing is priced on conditions at that future moment, not today's. If you take one, treat the balloon as a deadline you are working towards from day one.

To model the payment phase here, enter the balance, the rate and the payment. Ignore the payoff date the calculator returns, because the loan ends at the balloon instead. What you want from it is the interest total over the months you will actually hold the loan.

Snowball or avalanche: which order should you pay multiple loans?

Once there is more than one debt, the minimums are fixed and the only real decision is where the extra money goes.

• Avalanche. All extra to the highest APR first, minimums on everything else. When it clears, roll its whole payment onto the next highest. Mathematically optimal, always the lowest total interest.
• Snowball. All extra to the smallest balance first, regardless of rate. You retire a whole debt sooner, which is motivating, and then roll that payment forward.

Avalanche wins on arithmetic and the gap is widest when the rates are far apart, a 24% card alongside a 6% student loan. When every rate is within a couple of points, the difference over the whole payoff is often small enough that the method you will actually finish matters more. Debt snowball versus avalanche runs both side by side on the same set of balances.

Either way, the rolling is the part that does the work. Keeping the total monthly outlay flat as individual debts clear is what accelerates the whole plan. Whether to do any of this before investing depends on the rate you are paying against the return you would expect, which paying off debt or investing works through.

Common mistakes when calculating a loan payoff

Comparing loans on the monthly payment. The $25,000 renovation above has a $238.91 option and a $556.11 option, and the cheap-looking one costs $9,637 more. Compare total paid over the life of the loan, then check that the monthly figure fits.

Assuming the quoted rate is the cost. An origination fee deducted from proceeds raised an 11% business loan to an effective 12.34%. Points do the same to hard money. Model against the cash that actually reaches your account.

Treating a factor rate as an interest rate. A factor of 1.3 is not 30% a year. Repaid over twelve months it is roughly 51%, and over six roughly 97%.

Sending extra money without directing it at principal. On student loans especially, overpayments are often applied to future installments by default. That advances your due date and saves nothing. Instruct the servicer in writing and verify on the next statement.

Forgetting that a balloon is not a payoff. Payments sized on a 30-year schedule leave 92% of a $200,000 loan outstanding after seven years. The balloon date is the real maturity.

Ignoring what happens when a HELOC draw period ends. Ten years of interest-only payments leave the balance exactly where it started, and the payment then steps up sharply. Calculate the repayment-period payment before you open the line.

Stretching the term to make the loan affordable. Going from 36 to 84 months nearly doubles what a payment supports and, at $400 a month, takes the interest from $1,821 to $8,738. The low payment is the product being sold. The total is the price.

Using an example rate. Every rate on this page is illustrative and labeled as such, because rates change constantly and vary by borrower, product and country. Use the number on your own offer.

Related calculators

• Mortgage Calculator: payment, interest and schedule on a home loan
• Auto Loan Calculator: payment and total cost on a vehicle, including the term trap
• Credit Card Payoff Calculator: revolving balances where the minimum payment shrinks as you pay
• Refinance Calculator: whether replacing an existing loan actually saves money after costs
• Compound Interest Calculator: the same math working for you instead of against you
• Savings Goal Calculator: what it takes to reach a target by a date