See how extra payments can help you pay off your loan faster and save thousands in interest
• Start with highest interest loans
• Use windfalls for extra payments
• Consider bi-weekly payments
• Round up your payments
• Track your progress monthly
Our free loan payoff calculator shows you exactly how extra payments can accelerate your loan payoff and save you thousands in interest. Whether you want to pay off your mortgage early, eliminate car payments, or become debt-free faster, this calculator helps you plan your strategy.
Paying off loans early offers several benefits: significant interest savings, faster equity building, improved cash flow, and peace of mind. Even small extra payments can make a big difference over time, especially on long-term loans like mortgages.
Just as compound interest works against you when borrowing, it works in your favor when paying extra. Each extra payment reduces your principal, which reduces the interest charged on future payments. This creates a snowball effect that accelerates your payoff.
Generally, focus on high-interest debt first (credit cards, personal loans), then move to medium-interest debt (auto loans, student loans), and finally low-interest debt (mortgages). However, some people prefer the psychological boost of paying off smaller balances first.
Making half your monthly payment every two weeks results in 26 half-payments per year, which equals 13 full payments instead of 12. This simple change can shave years off your loan term and save thousands in interest.
Before accelerating payoff on tax-deductible loans like mortgages, consider your tax situation. The interest savings might be partially offset by reduced tax deductions. Consult with a tax professional to understand the full impact.
While paying off debt is important, maintaining an emergency fund is crucial. Aim for 3-6 months of expenses before aggressively paying down debt. This prevents you from taking on new debt if unexpected expenses arise.