Loan & debt payoff calculator

APR (annual percentage rate) is the simple annualized rate that consumer loans quote — divide by 12 to get the monthly rate used in amortization. APY (annual percentage yield), also called EAR, includes the effect of intra-year compounding: an APR of 12% with monthly compounding produces an APY of 12.68%. For loans, APR is the standard quote and is what this calculator uses; for savings products, APY is more common. If your loan paperwork quotes EAR/APY instead, convert: APR_equivalent = ((1 + APY)^1/12 − 1) × 12.

Every dollar of extra principal payment shortens the loan and avoids all the interest that would have accrued on that dollar for the rest of the term. The effect compounds: on a $20,000 / 7% / 60-month loan ($396/mo), adding just $50/month in extra principal cuts about 8 months and saves ~$500 in interest. On a 30-year mortgage the savings can run into tens of thousands. Extra payments are most powerful early in the loan, when the balance — and therefore the interest charge — is highest. The "Extra principal" input on this calculator shows you exactly how many months and dollars an extra payment saves.

Both methods assume you have multiple debts and are paying the minimum on all of them, then directing every spare dollar at one debt at a time. The avalanche method targets the highest-rate debt first; this is mathematically optimal — it minimizes total interest. The snowball method targets the smallest balance first; you eliminate accounts faster, which is psychologically motivating. In practice, the difference in dollars saved is often small (a few hundred dollars over a multi-year payoff), and people who use the snowball method are statistically more likely to stick with the plan. Pick the one you'll actually finish.

A credit-card "minimum payment" is typically 1–3% of the balance — designed to be just enough to cover interest plus a sliver of principal, so the issuer keeps earning interest on the rest. At a 24% APR, a $5,000 balance accrues roughly $100/month in interest alone. If your minimum is $100, the entire payment goes to interest and the balance never decreases. If it's $150, only $50 of every payment reduces principal, stretching payoff to decades. This calculator detects the never-pays-off case (when payment ≤ monthly interest) and warns rather than showing a useless infinity. The fix: pay materially above the minimum.

No. The calculator models a simple fixed-rate amortizing loan: one balance, one APR held constant, one level payment, and an optional extra principal payment each month. Real-world loans may include origination fees, prepayment penalties (especially on some auto loans and HELOCs), variable rates that adjust over time, or escrowed taxes/insurance (typical of mortgages). For mortgages with PITI, see the extrautil mortgage calculator. For investment growth (the inverse problem — money compounding for you instead of against you), see the compound interest explorer. This tool is meant as a quick estimator, not a substitute for your loan agreement.