Personal Loan Payoff Calculator

A personal loan is a fixed-rate amortizing installment loan: the lender hands you a lump sum up front, and you pay it back in equal monthly installments over a set term (commonly 24, 36, 48, 60, or 84 months). The monthly payment is calculated so that the loan reaches a zero balance at the end of the term, given the APR. Because the rate is fixed, that payment doesn't move — unless you do something to change it.

Each monthly payment splits between interest (based on the outstanding balance at the start of the month, at the APR / 12 monthly rate) and principal (the rest). In the early months of the term, the balance is highest, so interest eats most of the payment and only a small slice goes to principal. As the balance shrinks, the interest portion shrinks too — and a bigger slice of each fixed payment goes to principal. That's why the last year of a loan feels like it pays itself off fast: it sort of does.

The APR includes the nominal interest rate but also reflects any origination fee (most online personal-loan lenders charge 1–8% up front, deducted from the disbursed amount). The APR figure on your loan documents is the true cost; the quoted "interest rate" alone understates it. Comparing offers? Always compare APRs, not rates.

An extra dollar applied to principal removes that dollar from every future month's interest calculation. The earlier the prepayment lands, the more future months are still ahead, and the more interest gets canceled. On a 60-month loan, an extra $1,000 paid in month 6 will save substantially more interest than the same $1,000 paid in month 54 — often three to five times more, depending on APR.

That's why a small extra monthly payment, sustained from the beginning, often beats a larger one-time payment made years in. $50/month from month 1 of a 48-month loan adds up to $2,400 in extra principal payments — but each dollar starts working immediately, canceling more cumulative interest than a one-shot $2,400 in month 36 would. The paying extra on principal article works through the math with a $25,000 example.

Bigger-picture: extra principal payments are a guaranteed risk-free return equal to your loan's APR. An extra $100 on a 14% personal loan earns you 14% on that $100, every year, until the loan is paid off. That's a better risk-adjusted return than most investments, and it's tax-free (you avoid the interest charge entirely, rather than earning interest that gets taxed).

The single most important thing to confirm with your lender: that any payment above the scheduled amount is applied to principal, not credited as a pre-payment of next month's installment. The two sound similar but produce very different results. A principal-only payment reduces your balance immediately and cancels interest going forward. A pre-paid future installment just moves your next due date out without reducing interest at all — the balance keeps accruing as if nothing happened.

Most online personal-loan servicers (SoFi, LightStream, Marcus, Upstart, Best Egg) default to applying excess to principal. Most bank- and credit-union-issued loans do too, but some don't. Check the loan agreement or call before sending the first extra payment. Many servicer portals have an explicit "principal only" option in the payment flow; use it. After the payment posts, verify on your next statement that the balance dropped by the full extra amount. If it dropped by less, the lender probably applied some of it as a pre-paid installment — call and have them reapply.

Other tools that compose well with extra principal: the extra payment savings calculator works for any fixed-APR loan and also supports one-time lump sums. If you have multiple debts, the auto loan payoff calculator and student loan payoff calculator handle the quirks specific to those loan types.