Loan Payoff Comparison Calculator
Compare your standard loan repayment against making extra payments to see how much interest and time you can save.
Formulas Used
Standard Monthly Payment (PMT):
PMT = P × r / (1 − (1 + r)−n)
Where P = loan balance, r = monthly interest rate (annual rate ÷ 12), n = remaining months.
Accelerated Payoff: The lump sum is subtracted from the balance first, then the loan is amortised month-by-month using PMT + extra payment until the balance reaches zero.
Monthly Interest Charge:
Interestmonth = Remaining Balance × r
Interest Saved = Total Interest (Standard) − Total Interest (Accelerated)
Assumptions & References
- Interest compounds monthly (standard for most consumer loans).
- The standard monthly payment is calculated using the classic PMT formula assuming the loan runs its full remaining term.
- Any lump sum payment is applied immediately to the principal at the start of the accelerated scenario.
- Extra monthly payments are applied entirely to principal after interest is deducted each month.
- No prepayment penalties are assumed.
- Calculations follow standard amortisation methodology per the U.S. Consumer Financial Protection Bureau (CFPB) guidelines.
- Results are rounded to the nearest cent for display; internal calculations use full floating-point precision.