Loan Payoff Calculator

How Extra Payments Help

Making extra payments on your loan is one of the most effective ways to save money and become debt-free faster. Even small additional payments can make a significant difference over the life of your loan by reducing the principal balance faster and, consequently, the amount of interest you pay.

Benefits of Extra Payments

• Save on Interest: Extra payments reduce your principal balance, which means less interest accrues over time
• Pay Off Debt Faster: Additional payments can shorten your loan term by months or even years
• Build Equity Faster: For mortgages and car loans, you build ownership faster
• Financial Freedom: Becoming debt-free sooner frees up money for other financial goals
• Improved Credit Score: Lower debt-to-income ratio can positively impact your credit

Strategies for Making Extra Payments

• Round Up Payments: If your payment is ₹487, round it up to ₹500
• Use Windfalls: Apply bonuses, tax refunds, or gifts directly to your loan
• Bi-Weekly Payments: Pay half your monthly payment every two weeks (equals 13 monthly payments per year)
• Automate Extra Payments: Set up automatic additional payments to stay consistent
• Reduce Expenses: Cut one discretionary expense and apply those savings to your loan

Important Considerations

• Check for Prepayment Penalties: Some loans charge fees for early payoff
• Specify "Apply to Principal": Make sure extra payments go toward principal, not future interest
• Maintain Emergency Fund: Don't sacrifice your emergency savings to pay off low-interest debt
• Consider Interest Rates: Prioritize high-interest debt first (e.g., credit cards)
• Tax Implications: Consider tax deductions (like mortgage interest) before aggressively paying off certain loans