Does paying extra principal save interest?

Usually yes for a fixed-rate amortizing loan, because future interest is charged on a lower balance. The exact result depends on timing, lender rules, and fees.

Is it better to shorten the term or lower the payment?

Keeping the payment and shortening the term usually saves more interest. Lowering the payment may be useful when cash flow matters more.

Does this calculate a lender payoff quote?

No. A payoff quote can include exact daily interest, fees, escrow, or other lender-specific amounts. Use this as an estimate before requesting the official quote.

Can I use it for a mortgage, auto loan, or personal loan?

Yes, when the loan is a fixed-rate amortizing loan. Variable-rate loans, interest-only loans, and special repayment rules need a separate model.

Loan Payoff Calculator

Estimate how an extra principal payment can reduce interest, shorten a fixed-rate loan, or lower a recast-style payment.

Starting point

Original loan amount

Current balance

Original loan amount ($)

APR (%/year)

Original term (months)

Months already paid

Extra principal payment ($)

Payoff strategy

Keep payment, shorten term

Recast payment, keep term

What extra principal payments change

Early payoff intent in English search results centers on extra payments, interest saved, and how much faster the loan can be paid off. This calculator models a fixed-rate amortizing loan and applies one extra principal payment.

Use original loan amount when you know the original term and months already paid.
Use current balance when you want to start from today's outstanding principal.
Compare keeping the same payment to shorten the payoff term.
Compare recasting the payment over the remaining term to lower the monthly payment.

Confirm payoff rules

Ask your lender how extra payments are applied. Some loans require principal-only instructions, payoff quotes, exact dates, or prepayment-fee checks.

Payoff math used by the calculator

M = P \cdot \frac{i ( 1 + i ) ^{n}}{( 1 + i ) ^{n} - 1}

M is the regular fixed payment, P is principal, i is the monthly rate, and n is the number of monthly payments.

B_{a f t er} = max (0, B_{b e f or e} - E)

B_after is the balance after the extra principal payment E.

I n t er es t s a v e d = I_{ba se} - I_{n e w}

Interest saved compares the original future interest with the recalculated payoff path.

Shorten term vs lower payment

Strategy	What changes	Typical result
Keep payment, shorten term	Payment stays close to the original amount	Usually saves more interest.
Recast payment, keep term	Payment is recalculated over the remaining term	Usually improves monthly cash flow but saves less interest.
Full payoff	Extra payment covers the balance	Calculator shows the loan closing scenario.

Frequently Asked Questions

Sources and References

Calculations are based on the listed reference sources. Links open in a new tab.

Updated: June 2, 2026

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