Loan Payoff Calculator

About the Loan Payoff Calculator

Every other loan calculator starts at the beginning — a fresh amount, a rate, a term. This one starts where you actually are: partway through, with a balance on a statement and a payment leaving your account each month.

That changes the interesting questions. Not "what would this cost" but "how much longer", "what if I paid more", and the one people most often get wrong: should I put a lump sum in, or add to the monthly payment?

Those two are not interchangeable, and the answer is not a matter of preference.

How to Use the Loan Payoff Calculator

Enter the balance outstanding — what you owe today, from your most recent statement, not what you originally borrowed.

Add the annual interest rate and the monthly payment you are making now.

That alone gives you the payoff date and the interest still ahead of you.

Then try either or both of the last two fields: extra each month, and a lump sum today. Enter both and the calculator compares them directly.

How Long Is Left

The balance, rate and payment determine the date. There is nothing else to know.

Solving the payment formula for the number of payments rather than the payment gives:

          −log(1 − B·r ÷ P)
  n  =  ─────────────────────
            log(1 + r)

  B = balance, r = monthly rate, P = monthly payment

On £18,000 at 9% paying £420 a month, that is 52 payments — four years and four months — with £3,796.35 of interest still to come.

Right now, £135 of each £420 payment is interest and £285 reduces the balance. That ratio improves every month.

Why a Small Overpayment Does So Much

Your scheduled payment already covers the interest. So everything above it goes straight to the balance, pound for pound.

That is why the effect is out of proportion to the amount. Adding £100 lifts the monthly balance reduction from £285 to £385 — a 35% increase in the speed the debt falls, for a 24% increase in the payment.

At £100 extra the total paid from here falls from £21,796.35 to £20,918.99. You pay more each month and less overall — which is the whole point, and the part that is easy to miss when looking only at the monthly figure.

Lump Sum or Monthly Extra?

Here is the comparison people get wrong, because the obvious way to make it is the wrong way.

Do not compare the totals. £100 a month over 41 months is £4,100; a £3,000 lump sum is £3,000. They are different amounts of money, so of course they produce different results.

Compare what each unit returns:

The lump sum works roughly twice as hard per pound. And this is not specific to these figures — money applied today always beats the same money applied gradually, because every month it sits in the balance is a month it is not accruing interest. A pound paid in month one avoids interest for the entire remaining term; the same pound paid in month twelve does not.

The practical conclusion is not "always use a lump sum" — it is that if you have cash available and no better use for it, putting it in now rather than dripping it in is worth a great deal.

The First Pound Saves the Most

A detail worth noticing, because it runs against intuition:

The return falls as the lump sum grows. Six times the money does not save six times the interest.

The reason is that the first pound you put in is the one that would have sat in the balance longest — right to the end of the term. Each additional pound displaces balance that would have been cleared sooner anyway, so it has less interest left to avoid. The saving is real throughout, but it is front-loaded within the lump sum itself.

When the Payment Never Clears It

If your payment is at or below the monthly interest, the balance never falls.

£5,000 at 24% accrues £100 of interest a month. Pay exactly £100 and you pay £100 every month forever and still owe £5,000. Pay £99 and the debt grows.

This calculator refuses to return a date in that case, because the honest answer is that there isn't one. Instead it names the threshold — the figure you must exceed before any of the payment starts reducing the debt.

This is not hypothetical. Credit card minimum payments are often set close to interest plus a small percentage, which is why a balance left at the minimum can take decades to clear.

Step-by-Step Example

£18,000 balance at 9%, paying £420 a month.

  Monthly rate:  9% ÷ 12 = 0.75%
  Interest now:  18,000 × 0.75%  =   135.00
  To balance:    420 − 135       =   285.00

  Payments left: −log(1 − 18,000 × 0.0075 ÷ 420) ÷ log(1.0075)
               = 52 payments  (4 years 4 months)

  Interest left: 3,796.35
  Total:         21,796.35     (final payment 376.35)

Add £100 a month:

  Cleared in 41 payments — 11 months early
  Interest saved: 877.36
  Total from here: 20,918.99

Or put £3,000 in today:

  Balance drops to 15,000 immediately
  Cleared in 42 payments — 10 months early
  Interest saved: 1,271.03   (42.37% return on the 3,000)

Understanding Your Result

Time left is the payoff at your current payment.

Interest remaining is what the debt will still cost from here. It is not the interest you have already paid, which is gone either way.

Total from here includes the adjusted final payment — the last one only settles what is left, so it is rarely a full payment.

What each option does prices the overpayment and the lump sum separately.

Worth knowing carries the per-unit comparison when you enter both, and the caveats when you enter one.

When Should You Use This Calculator?

Deciding what to do with a bonus or windfall. The return figure makes the comparison against saving or investing concrete — clearing a 9% loan is a guaranteed 9%.

Setting an overpayment you can sustain. The table above shows the trade between monthly strain and months saved.

Checking whether you are stuck. If the payment barely dents the balance, the minimum-payment check is the most useful thing on this page.

Planning a payoff date. Working backwards from "cleared by next summer" to the payment that achieves it.

Comparing debts. Run each one and clear the highest rate first — that is where every pound saves the most.

Common Mistakes

Comparing a lump sum to overpayments by their totals. They are different amounts of money. Compare what each unit returns.

Overpaying the lowest-rate debt first. It feels satisfying to clear a small loan, but the pound saves most where the rate is highest.

Forgetting the emergency fund. Money in a loan cannot be taken back out. Clearing debt with cash you may need within months can force you to borrow again at a worse rate.

Assuming an overpayment reduces the payment. Most lenders keep the payment and shorten the term, which is what this calculator models. Some reduce the payment instead, which saves far less — check which yours does.

Ignoring early repayment charges. Some agreements penalise overpaying. Check before relying on any saving here.

Using the original loan amount instead of the balance. The calculator needs what you owe today.

Reading this as advice. Every figure here is an estimate for planning, not financial advice. Check anything you intend to act on with your lender.