Home
Back
Loan Payoff Formula:
| From: | To: |
The loan payoff calculation determines how many months it will take to fully repay a loan given the current balance, interest rate, and monthly payment amount. This helps borrowers understand their repayment timeline.
The calculator uses the loan payoff formula:
Where:
Explanation: The formula calculates the time required to pay off a loan by considering the relationship between the loan balance, interest rate, and regular payments.
Details: Understanding your loan payoff timeline helps with financial planning, budgeting, and evaluating the impact of making extra payments.
Tips: Enter the current loan balance in USD, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and your monthly payment amount in USD. All values must be positive numbers.
Q1: How can I pay off my loan faster?
A: Making larger monthly payments or additional principal payments will reduce your payoff time and total interest paid.
Q2: What if my monthly payment doesn't cover the interest?
A: If your payment is less than the accrued interest, your loan balance will grow (negative amortization), and you'll never pay it off.
Q3: How does the interest rate affect payoff time?
A: Higher interest rates increase the payoff time for a given payment amount, as more of each payment goes toward interest rather than principal.
Q4: Can I use this for credit card debt?
A: Yes, if your credit card has a fixed interest rate and you're making fixed monthly payments.
Q5: What's the difference between monthly and annual rate?
A: The monthly rate is the annual rate divided by 12. Make sure to use the monthly rate in this calculator.