Car Loan Early Payoff Calculator

Evaluate how prepayments reshape your loan

Calculation Methodology

Monthly Payment Formula

The calculator applies the well-known amortization equation:

M = P × [r(1+r)^n] / [(1+r)^n – 1]
  • M: Payment amount per month
  • P: Loan principal
  • r: Monthly rate derived from annual interest
  • n: Total number of monthly payments

Interest Calculation

For every month:

Interest = Remaining Principal × Monthly Interest
Principal Paid = Total Payment – Interest
New Principal = Old Principal – Principal Paid

Prepayment Impact

Extra monthly payments lower the principal earlier, which reduces future interest charges. This compounding reduction shortens the loan term and decreases total lifetime interest.

Lump Sum Payment

A lump sum applied at any period goes fully toward principal, cutting the balance instantly and reducing future interest amounts.

References

  • Financial Standard Amortization Methods
  • CFPB Guidance on Loan Calculations
  • Federal Reserve Consumer Lending Standards

Disclaimer: Outputs are estimates based on your entries. Lending institutions may calculate differently. Always confirm with your lender.