Car Loan Early Payoff Calculator

How it works

This calculator assumes a simple-interest loan: each day the balance owes APR ÷ 365 of itself in interest, and each payment first covers the interest built up since the last payment, with the rest reducing the balance. That makes the timing of payments matter, which is what this calculator models.

The current payment is the level monthly payment that repays your balance at the APR over the months remaining, and remaining interest as scheduled is that payment times the months left, less the balance. A month is treated as 365 ÷ 12 days, so a month of daily interest equals one month at APR ÷ 12.

Half the payment every two weeks: each half-payment is credited the day it is paid, 14 days after the last, so the balance falls every two weeks instead of every month and less interest builds up between payments. There are 26 half-payments a year, the same as 13 monthly payments. The time to pay off is the number of half-payments × 12 ÷ 26 months.

An extra amount each month is added to each monthly payment; a lump sum is taken off the balance today and the same monthly payment then runs until the smaller balance is paid. Interest saved is the scheduled remaining interest less the interest under the method; the extra money and the lump sum are principal, not interest.

Formula

M = B × r ÷ (1 − (1 + r)^−N)      r = APR ÷ 12 ÷ 100, N = months left   (= B ÷ N when r = 0)
interest as scheduled = M × N − B
daily rate d = APR ÷ 100 ÷ 365
biweekly: payment M ÷ 2 every 14 days       extra: M + extra every 365 ÷ 12 days
lump: M every 365 ÷ 12 days on B − lump
each payment: interest = balance × d × days;  balance = balance + interest − payment
last payment = balance + interest when that is no more than the payment
months = payments (monthly) or half-payments × 12 ÷ 26 (biweekly)
interest saved = interest as scheduled − Σ interest under the method

Example

A $15,000 balance at 7% APR with 48 months left has a payment of $359.19 and $2,241.30 of interest still to come.

Paying half of it, $179.60, every two weeks clears the loan in 95 half-payments, about 43.8 months, with a final half-payment of $125.65. Interest falls to $2,007.75, saving $233.54 and about 4.2 months.

Paying $100 more each month instead clears it in 37 payments, 11 months sooner, saving $551.17. A $2,000 lump sum today saves 7 months and $596.27.

Assumptions and limitations

• Interest is assumed to be simple daily interest on the balance at APR ÷ 365; a precomputed-interest loan (interest fixed at signing) saves little or nothing from paying early. The loan contract states which method applies.
• Monthly payments are 365 ÷ 12 days apart and half-payments 14 days apart. Real months of 28 to 31 days and leap years move the figures by small amounts.
• Each payment, and every extra dollar, is credited to the loan the day it is paid. Some lenders hold half-payments until a full payment has arrived, which removes most of the biweekly saving; ask the lender how it applies them.
• The current payment is assumed to be the level payment for the balance and months entered; a statement showing a different payment gives slightly different results. No prepayment penalty is assumed.
• Results are informational and educational, not financial advice.

Frequently asked questions