Smart Loan Payoff Calculator

Every extra payment goes directly to your principal balance, not interest. Because interest is calculated on your remaining balance, reducing the principal faster means less interest accrues each month. Even small extra payments compound dramatically over time — an extra $200/month on a $25,000 loan at 8.5% for 48 months can save thousands in interest and cut months off your loan.

The Avalanche method targets your highest-interest debt first, which minimises total interest paid — it is mathematically optimal. The Snowball method targets the smallest balance first, giving psychological wins by eliminating debts quickly. If you have multiple loans, use this calculator per loan and prioritise extra payments using whichever strategy fits your psychology. Most people stick with plans that feel rewarding.

Bi-weekly payments mean you make 26 half-payments per year, which equals 13 full monthly payments instead of 12. That one extra payment per year goes straight to principal. On a 30-year mortgage, this strategy alone can shave 4-5 years off your loan and save tens of thousands in interest without feeling like a big sacrifice.

This depends on your interest rates. If your loan interest rate is higher than your expected investment return, paying off the loan first gives a guaranteed, risk-free return equal to your interest rate. If your loan rate is low (e.g. a 3% mortgage) and you expect 8-10% from investments, investing may be better. Tax-deductible mortgage interest further tips the balance toward investing. Always have an emergency fund before making extra loan payments.

A lump-sum payment reduces your principal balance immediately. Because interest is computed on the outstanding balance, a large one-time payment at the start of the loan has the greatest impact — it prevents interest from compounding on that amount for the entire remaining term. This calculator lets you specify exactly which month to apply your lump sum to see the precise effect.

Yes. Credit cards typically require a minimum payment that is a percentage of the outstanding balance (e.g. 2%) plus fees, with a flat minimum floor (e.g. $25). Because the minimum payment shrinks as the balance falls, making only minimum payments can mean it takes decades to pay off even a moderate balance. This calculator models credit card minimums accurately — always pay more than the minimum.