Snowball or avalanche — which payoff method is better?

Avalanche (extra payments on the highest-APR loan first) saves the most interest, mathematically. Snowball (smallest balance first) saves the least but produces visible wins that keep many people motivated. If you've stuck with avalanche for three months, stay; if you keep falling off it, switch to snowball. The best strategy is the one you finish.

Do prepayment penalties matter?

Mortgages issued after 2014 generally can't charge prepayment penalties on owner-occupied homes (Dodd-Frank rules). Auto loans, personal loans, and especially private student loans can — read the contract. If a penalty exists, model it before throwing money at the principal: in rare cases the penalty exceeds the interest saved.

What about recasting?

Recasting is a lender-side option (mostly on mortgages) where you make a large lump-sum principal payment and the lender re-amortises the remaining balance over the original term, lowering the monthly payment without refinancing. It doesn't shorten the loan — it lowers the payment. This calculator assumes the payment stays fixed and the term shortens, which is the higher-interest-savings strategy.

Will my lender apply extra payments correctly?

Not always automatically. Some servicers credit extra dollars to the next month's payment (which saves you nothing) instead of principal. After your first extra payment, check the next statement: the principal balance should drop by the full extra amount. If it doesn't, call and request 'principal only' application — in writing.

Does this work for credit cards?

It works for any fixed-APR amortising debt, including a credit card you've stopped charging on. If you're still adding new charges, the answer is meaningless — the input balance is a moving target. Freeze the card first, then run the calculator.

Loan Payoff Calculator

How many months — and how much interest you save by adding to the payment.

Buğra SözeriFinance

Updated May 30, 2026 · Published May 30, 2026

Reviewed by Convertitive Finance Desk

Financial disclaimer: This calculator is for educational purposes only and is not financial advice. Always confirm prepayment terms, penalty clauses, and how extra payments are applied (to principal vs next payment) with your lender or a qualified financial professional before changing your strategy.

Extra principal payments are the single highest-return move most borrowers can make: every dollar of extra payment saves future interest at the loan's APR, risk-free. This tool answers two questions: how long until the loan is gone, and how much interest you save by paying more than the minimum. The math is the inverse of the standard amortising loan formula — same engine as the mortgage and auto loan calculators.

Current balance ($)

APR (%)

Monthly payment ($)

Extra monthly payment ($)

Effective monthly payment with extra: $350.00

Months to payoff

4 yr 1 mo

Total interest

$2,114.53

Total paid

$17,114.53

With $50.00/mo extra:

Pay off 10 mo sooner · save $426.40 in interest

Closed-form fixed-rate amortisation. Variable-rate loans, deferred interest, and prepayment penalties are not modeled.

How to use

Enter your current balance and APR
Use the balance from your latest statement (not the original loan amount). APR is the rate disclosed on the same statement.
Pick a mode
Set payment lets you say 'I pay $X/mo, how long until I'm done?'. Set payoff date lets you say 'I want to be done in N months, what payment hits that?'.
Add an extra monthly payment
Any amount above the minimum goes straight to principal. The widget shows months saved and interest saved side-by-side with the no-extra baseline.

Quick reference

Balance	APR	Payment	Extra	Months	Interest saved
$15K	6.5%	$300	$0	59	—
$15K	6.5%	$300	$50	49	$464
$25K	19.9%	$600	$0	71	—
$25K	19.9%	$600	$200	40	$8,109

Frequently asked questions

Snowball or avalanche — which payoff method is better?: Avalanche (extra payments on the highest-APR loan first) saves the most interest, mathematically. Snowball (smallest balance first) saves the least but produces visible wins that keep many people motivated. If you've stuck with avalanche for three months, stay; if you keep falling off it, switch to snowball. The best strategy is the one you finish.
Do prepayment penalties matter?: Mortgages issued after 2014 generally can't charge prepayment penalties on owner-occupied homes (Dodd-Frank rules). Auto loans, personal loans, and especially private student loans can — read the contract. If a penalty exists, model it before throwing money at the principal: in rare cases the penalty exceeds the interest saved.
What about recasting?: Recasting is a lender-side option (mostly on mortgages) where you make a large lump-sum principal payment and the lender re-amortises the remaining balance over the original term, lowering the monthly payment without refinancing. It doesn't shorten the loan — it lowers the payment. This calculator assumes the payment stays fixed and the term shortens, which is the higher-interest-savings strategy.
Will my lender apply extra payments correctly?: Not always automatically. Some servicers credit extra dollars to the next month's payment (which saves you nothing) instead of principal. After your first extra payment, check the next statement: the principal balance should drop by the full extra amount. If it doesn't, call and request 'principal only' application — in writing.
Does this work for credit cards?: It works for any fixed-APR amortising debt, including a credit card you've stopped charging on. If you're still adding new charges, the answer is meaningless — the input balance is a moving target. Freeze the card first, then run the calculator.

About

The formula

Given balance P, monthly rate r (APR / 12 / 100), and monthly payment M, the number of months to payoff is n = −ln(1 − P·r / M) / ln(1 + r). If r = 0, n = P / M. If M is at or below P·r, the payment doesn't even cover interest and the balance grows — the widget warns you.

Why interest savings are so large at high APR

Interest savings scale with both rate and time. At 6%, a $50/mo extra payment on $15K saves a few hundred dollars; at 20%, a $200/mo extra payment on $25K saves five figures. The higher the APR, the more leverage prepayment gives you — which is why the avalanche method targets high-rate debt first.

Sources & references

Authoritative references behind the math, constants, and tables on this page. Verified by Buğra Sözeri on the dates shown and re-checked at every deploy.

CFPB — Consumer Financial Protection Bureau — Regulatory guidance on prepayment, principal-only payment application, and disclosure of penalty clauses(as of 2026-05-30)
IRS Publication 936 — Home Mortgage Interest Deduction — Reference for how prepayments affect deductible mortgage interest in a given tax year(as of 2026-05-30)