Debt Payoff by Extra Payment Calculator

An extra payment does not change the interest rate — it shortens the loan by skipping straight to principal, which is the amount future interest is calculated from.

• Each month: interest = balance × (APR ÷ 100 ÷ 12)
• Principal reduction = payment (+ extra) − interest
• Balance carries forward until it reaches $0, and the month count becomes the payoff time
• Interest saved = scheduled total interest − total interest paid with the extra amount

An $8,000 balance at 22% APR, currently paid at $200 a month, with an extra $100 added.

1. 1At $200 a month the balance clears in 73 months — 6 years, 1 month — with about $6,551 of interest.
2. 2At $300 a month ($200 + $100 extra) it clears in 37 months — 3 years, 1 month — with about $3,083 of interest.
3. 3That is 36 months saved and roughly $3,468 less interest for $100 more a month.
4. 4Most of the saving comes from skipping the interest that would have piled up in the later, slower-paying months.

Does the extra payment need to be applied to principal to work?

Yes. Ask your lender or servicer to apply any extra amount directly to principal rather than to next month's payment — some default to the latter, which does not shorten the loan.

What if my payment doesn't cover the interest?

The balance grows every month instead of shrinking, which this calculator flags as never paying off. Adding enough extra to exceed the monthly interest is the first requirement before any progress is possible.

Is it better to pay extra on the highest-rate debt first?

Generally yes for minimizing total interest across several debts — this is the "avalanche" method. Paying off the smallest balance first (the "snowball" method) can help motivation even though it usually costs a bit more interest.

Will my required minimum payment change?

Usually not on an installment loan with a fixed schedule — you simply finish early. On a credit card, the minimum is often a percent of the current balance, so it typically falls each month as the balance drops, even before you pay it off.

Are there penalties for paying a loan off early?

Most consumer loans and mortgages issued in recent years do not carry prepayment penalties, but some do — check your loan agreement before committing to a payoff strategy that assumes there is none.