Loan Payoff Calculator
See your monthly payment, total interest, and full payoff timeline for any fixed-rate loan.
Last updated
How it works
Enter the loan amount, the annual interest rate (APR), and the term in years. The calculator converts the annual rate to a monthly rate by dividing by 12, and multiplies the term by 12 to get the total number of monthly payments. It then applies the standard fixed-rate amortization formula, payment = P x (r x (1+r)^n) / ((1+r)^n - 1), where P is the loan amount, r is the monthly interest rate, and n is the number of payments. This is the same formula banks and lenders use to size a level monthly payment that fully retires the loan, principal and interest, by the final payment.
For example, a $20,000 loan at 6.5% APR over 5 years works out to a monthly rate of about 0.5417%, and 60 total payments. Plugging those into the formula gives a monthly payment of $391.32. Over the full 5 years that's $23,479.38 paid in total, meaning $3,479.38 of it is interest on top of the $20,000 you borrowed. Early payments are mostly interest and later payments are mostly principal, even though the payment amount itself never changes, because interest is charged on whatever balance is still outstanding.
This calculator assumes a fixed interest rate for the full term and a standard fully amortizing schedule, one fixed payment every month with no skipped or extra payments. It doesn't factor in origination fees, closing costs, PMI, property taxes, or homeowners insurance, all of which can add to what you actually pay on a real mortgage or auto loan even though they aren't part of the loan's interest math. Variable-rate loans, where the rate can change during the term, aren't modeled here since the formula assumes one constant rate throughout.
Frequently asked questions
How is the monthly payment calculated?
It uses the standard fixed-rate amortization formula, which spreads principal and interest across equal monthly payments over the loan term. The formula divides your annual rate by 12 to get a monthly rate, then solves for the flat payment amount that pays off the entire balance, plus all accrued interest, in exactly that many payments.
Does this work for mortgages and auto loans?
Yes, it works for any fixed-rate, fully amortizing loan, including personal loans, auto loans, and mortgages. It doesn't account for extra costs like PMI, closing costs, property taxes, or homeowners insurance, so a real mortgage payment (often called PITI) will typically be higher than the number shown here.
What does "total interest" mean?
It's the total amount you'll pay in interest over the full life of the loan, on top of repaying the original amount borrowed. For a $20,000 loan at 6.5% over 5 years, that's $3,479.38, roughly 17% of the amount borrowed, paid purely as the cost of borrowing.
Why does most of my early payment go toward interest instead of principal?
Interest is charged each month on whatever principal balance is still outstanding, and early on that balance is close to the full loan amount, so the interest portion of the payment is at its largest. As the balance shrinks with each payment, the interest charge shrinks too, so more of each fixed payment goes toward principal over time even though the total payment stays the same.
Does a shorter loan term always mean I pay less interest?
Generally yes. Shortening the term raises the monthly payment but reduces how long interest has to accrue, which lowers total interest paid. On a $20,000 loan at 6.5%, a 3-year term costs about $2,067 in total interest versus about $4,947 for a 7-year term, even though the 3-year payment is roughly double.
What happens if I make extra payments toward the loan?
This calculator shows the payoff schedule if you pay exactly the calculated amount every month with no extra payments. Paying extra toward principal, even occasionally, reduces the balance interest is calculated on going forward and typically shortens the payoff timeline and cuts total interest, though the exact savings depend on your lender's prepayment terms and when the extra payment is applied.
Is the interest rate I enter the same as APR?
Enter the loan's APR (annual percentage rate) if you have it, since that's the figure lenders are required to disclose and it's what this calculator's formula expects. A loan's stated interest rate and its APR can differ slightly when fees are rolled into the APR calculation, so using APR generally gives a more accurate estimate of the real monthly cost.
Building a payoff plan and want to track it by hand too? The Clever Fox Budget Planner is a well-reviewed monthly bill tracker that pairs well with a payoff strategy.
View on AmazonAs an Amazon Associate, QuickAges earns from qualifying purchases.