Making a final loan payment in advance of the contract due date can be a thrilling experience that will free up cash and reduce the amount of interest you pay on the loan. To calculate early loan payoff, first decide whether to base the early payoff on a date, or on an amount you will pay in addition to the required monthly payment. Using a loan term calculator can make this process much less confusing. Most calculators will also provide an amortisation schedule so you can track your monthly progress toward a zero balance.
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Things you need
- Loan term calculator
- Printer (optional)
Gather loan information. To use a loan term calculator, you need to know the current principal balance of the loan and the annual interest rate. If you base the early payoff on an increased monthly payment, you need to know the maximum monthly payment you can afford.
Find a loan term calculator. If you prefer a calculator specific to the loan type, such as auto or mortgage, first check your bank's website. Some banks have separate calculators for auto, mortgage, student and personal loans. For an expanded list of calculators, see the Resources section.
Enter information. Once you decide on a calculator, start plugging in numbers. You can discover how much you can save by entering different monthly payments and loan terms. Most calculators have an option to print a payment, or amortisation schedule, so check this box and print the schedule before exiting the application.
Tips and warnings
- You can also use loan term calculators to determine interest savings and payoff dates for credit cards.
- The principal balance of your loan will depend on how the lender charges interest. If this is a new loan, enter the original loan amount. If you have been making payments and do not have an amortisation schedule, call your lender to determine this amount.
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