Early payoff calculator.

How extra principal saves interest

Auto loans use simple interest: each month, the interest charge equals the remaining balance times (APR ÷ 12). Pay extra principal, the next month's balance is lower, the next month's interest is lower. Compounded over the loan's remaining life, even modest extra payments add up.

Two requirements before this works:

• Your loan must use simple interest (almost all do — confirm in your contract)
• No prepayment penalty (rare on prime loans, more common on subprime)

How to make extra payments correctly

Most lenders accept extra payments via online banking. The trap: some apply the extra to your next scheduled payment by default, pushing your due date out without reducing principal. To avoid this, label the payment "principal only" if your portal allows, or call your lender to ask how to specifically apply extra to principal.

Common extra-payment cadences

• Round up: payment is $495, send $500. Tiny extra, modest acceleration.
• Bi-weekly: split your monthly into two halves paid every two weeks. Results in 26 half-payments (= 13 full monthly payments) per year. One extra payment annually.
• Annual lump sum: send $1,000–$5,000 from a tax refund or bonus.
• Match-the-payment doubling: send a duplicate of your scheduled payment as principal each month. Aggressive but effective — finishes a 60-month loan in roughly 30 months.

Frequently asked

Should I pay off the auto loan or invest the extra?

Above ~7% APR, paying off usually wins (it's a guaranteed return). Below ~5% APR, investing usually wins on expected return. In between, personal preference.

Will paying off early hurt my credit?

Slightly and temporarily. The closed account ages off your active credit list, dropping FICO 5–15 points for a few months. Recovers normally as other accounts age.

What if I have credit card debt too?

Pay that off first — credit card APRs are typically 15–25%, far above auto loan rates. Highest-rate debt always wins.

Read the full early-payoff strategy guide →