Loan Payoff Calculator

The amount to settle a loan today is the present value of the payments you have left — what those future payments are worth right now, once the interest still to be charged on them is stripped out. The gap between simply adding up the remaining payments and that present value is your interest saved: the higher the rate and the more payments left, the bigger the gap between the two numbers.

A common mental shortcut is to assume the payoff amount equals the original loan minus however many payments you have made — as if each payment chipped away at the balance in equal pieces. Amortized loans do not work that way. Early payments are mostly interest, with only a small slice going toward the balance; later payments flip that ratio. Two loans with the same original amount, rate and term have different payoff amounts at the same point in time only if their payment count and remaining schedule differ — but for any single loan, its own payoff amount always sits above a naive equal-slices estimate in the early years, because less principal has actually been retired than the payment count alone suggests.

The payoff amount and the interest saved are the two numbers to weigh against any other use for that same cash — most commonly, what it could otherwise earn. A loan's rate is a guaranteed return in the sense that paying it off guarantees you stop owing that interest, whereas most alternative uses of money carry some uncertainty about their return. Whether that trade favors paying off the loan or doing something else with the funds depends on the loan's own rate, the certainty and expected return of the alternative, and factors this calculator does not see, like liquidity needs and other debts — it is a comparison to make deliberately, not a question this page answers for you.

Most loans let you pay off early with future interest genuinely reduced, but not all: some contracts include a prepayment penalty, a fee charged specifically for paying ahead of schedule, which eats into or even erases the saving this calculator estimates. Terms also vary on how a payoff is calculated day to day — interest keeps accruing until the day the lender actually receives the funds, so a payoff quote dated two weeks out will differ slightly from one dated today.

This calculator assumes a constant rate, a standard schedule of equal payments, and no fees — a reasonable estimate, not a legal figure. The number that actually settles your loan is the official payoff quote from your lender or loan servicer, valid through a specific date, which accounts for the exact accrual method, any fees, and the precise day you plan to pay. Request that quote directly before sending a payoff payment; paying based on an estimate that is even slightly off can leave a small remaining balance that continues to accrue interest and fees.