Loan Early Payoff Calculator
Calculate how much you save in interest by paying off a loan early with a lump sum.
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Enter your values and click Calculate
How It Works
Both the original and lump-sum scenarios are simulated month by month. Each month, interest is calculated as balance × monthly rate, added to the balance, and then the monthly payment is subtracted. The simulation continues until the balance reaches zero, accumulating total interest. In the lump-sum scenario, the starting balance is reduced by the lump sum before simulation begins. Interest saved = original total interest − new total interest. Months saved = original payoff months − new payoff months.
Examples
$15,000 loan, $3,000 lump sum
Using a tax refund to pay down a car loan at 7.5% with $350/month payments.
Result: Saves approximately $630 in interest and cuts 6 months off the payoff timeline.
$8,000 personal loan, $2,000 lump sum
Applying a bonus to a high-rate personal loan at 12% with $200/month payments.
Result: Saves roughly $600 in interest and eliminates about 8 months of payments.
$50,000 student loan, $5,000 lump sum
Applying savings to a student loan at 6.5% with $550/month payments.
Result: Saves over $2,000 in interest and trims approximately 8 months off the payoff timeline.
Frequently Asked Questions
When is the best time to make a lump sum payment?
The earlier in the loan term you pay, the more interest you save — early payments prevent months or years of compounding interest on that reduced principal. A lump sum applied in year one saves far more than the same amount applied in year five, because interest charges on the larger balance have already been accumulating.
Should I pay off debt or invest the lump sum?
Compare the guaranteed after-tax return of paying off debt (equal to your loan's interest rate) against the expected return of investing. If your loan rate is 7% and you expect investments to return 8%, investing may edge out debt payoff — but only if you have an emergency fund and no higher-rate debts outstanding.
Does this work for mortgages?
Yes. Enter your current mortgage balance, interest rate, and current monthly payment, then input the lump sum you are considering. The calculator will show how many years sooner you will pay off the mortgage and how much total interest you will avoid paying.