Loan payoff calculator
There are two honest ways to get out of a loan faster: pay more toward the one you have, or refinance into different terms. This calculator lays out your current path, then compares an extra-payment plan and a refinance side by side - refinance interest is netted against closing costs so the comparison isn’t misleading.
How the math works
The current path uses the standard amortization formula to find your existing monthly payment and total interest. Option A reruns the same loan with your extra payment added - because early principal reduction stops that amount from accruing interest for the rest of the term, small extras produce outsized savings. Option B simulates a new loan at the refinance rate and term, with any closing costs added to the balance rather than paid separately, then nets the new total interest and costs against what the current loan would have cost. A lower monthly payment on a longer refinance term can still cost more overall - the net figure is the number that actually answers “is this worth it.”
Related reading
How do you calculate a refinance break-even point covers the timing question this tool’s net comparison is built around, and is refinancing actually worth the closing costs you have to pay again walks through when the math favors refinancing versus staying put. How does an extra payment actually change your amortization schedule explains why Option A moves the numbers the way it does, and does refinancing every time rates drop a little actually save money is worth reading before refinancing more than once.
The formula this calculator uses
current payment = amortised on the balance, rate and years remaining
with extra = simulate the balance forward at payment + extra
refinanced = amortise (balance + closing costs) at the new rate and term
compare total interest, not the monthly payment
What it assumes without asking
- Closing costs are financed into the new loan rather than paid in cash
- No prepayment penalty on the existing loan
- Both rates are fixed and neither changes
One example, computed in full: $200,000 at 6.50% with 25 years left
| Option | Monthly payment | Months to clear | Total interest |
|---|---|---|---|
| Do nothing | $1,350.41 | 300 | $205,124.30 |
| Pay $200 extra | $1,550.41 | 223 | $144,341.55 |
| Pay $500 extra | $1,850.41 | 164 | $101,630.73 |
| Refinance to 5.50% over 25 years, $4,000 costs financed | $1,252.74 | 300 | $175,821.55 |
What this calculator does not model
- Whether you would actually qualify for the new rate
- The value of keeping the cash instead of prepaying, which is the real argument against extra payments on a low-rate loan
- Tax treatment of interest, which varies by loan type and by filer
The guide behind this tool
A number on its own does not tell you what to do with it. The trap the table exposes is restarting the term: a lower rate over a longer period can still cost more in total. Interest rate against APR covers why the advertised rate is not the number to compare on.
Sources & further reading
This tool is a general educational estimate, not financial advice or a loan offer. Real quotes and closing costs vary by lender, credit, and loan type. See our disclaimer.