Auto Loan Payoff Calculator

Most US auto loans use daily simple interest, not monthly compounding. That means: every single day, interest accrues on the outstanding principal at the rate APR ÷ 365 (or 360 with some lenders). Unpaid interest sits in an 'accrued interest' bucket and gets paid first when your next monthly payment lands. Anything left over reduces principal. A generic monthly-compounding amortization calculator will be close but not exact — and worse, it doesn't show the timing effects that actually matter for auto loans.

With daily accrual, every day a payment arrives early is a day where less interest accrues before the next payment date. Pay 5 days early each month and you knock 5 days × balance × daily-rate off the next month's interest charge, every month. On a $22,000 loan at 7.25%, that's roughly $20-30 in saved interest the first month, declining as the balance does — but compounding over the life of the loan into a meaningful number. The calculator above quantifies it for your exact numbers.

A few lenders compute the daily rate as APR ÷ 360 instead of APR ÷ 365. Because 360 < 365, the daily rate is slightly higher under the 360-day method — but the offsetting factor is that they typically only accrue for 360 days per year in the formula, which produces slightly less total interest on a per-loan basis. The difference is small (a few dollars to a few tens of dollars on a typical loan) and your loan agreement specifies which method your lender uses. Check the disclosure box.

A generic monthly-compounding calculator assumes interest is computed once at the end of each month based on the period's average balance. Auto loans accrue daily and pay accrued interest first. For a loan you're holding to term with consistent on-time payments, the two answers differ by only a few dollars. But: (1) timing matters here and not in monthly compounding, (2) any extra principal payment in the middle of a cycle reduces accrual for the rest of that cycle, and (3) the 360-day variant is a quirk that monthly-compounding models can't represent.

Refinance if rates have dropped meaningfully since you took out the loan, your credit score has improved, or you're stuck in a high-rate dealer-arranged loan. Run the new APR through this calculator alongside your current one and compare total interest. Watch for: prepayment penalties on the original loan, origination fees on the new one (most auto refi has none, but verify), and the extended term trap — refi often resets the clock, which means more months of interest accruing even at a lower rate. Always compare total interest, not just monthly payment.

This calculator doesn't model negative equity (rolling unpaid balance from an old loan into a new one). If you're trading in a car that's worth less than its remaining loan balance, the difference gets added to your new loan, which means you're financing it at the new APR for the new term — turning a car-payment problem into a longer car-payment problem. Pay off the negative equity in cash if at all possible, or stop trading before you're ready and let the old loan catch up to the car's value.