Auto loan payoff calculator
Any amount above the scheduled payment goes straight at the principal, which is why small extra payments have an outsized effect.
Paying $100 extra each month saves
$856
in interest, and clears the loan 10 months early
- Normal payment
- $485.43
- 54 months
- With extra
- $585.43
- 44 months
- Interest saved
- $856
- of $4,213 total
- Months saved
- 10
- off the term
Assumes the extra goes to principal and the lender has no prepayment penalty. Check both — some agreements apply overpayments to the next instalment instead, which saves nothing.
Questions
›Does paying extra on a car loan save money?
Yes, and more than people expect. Extra money goes entirely to principal, so it removes all the future interest that principal would have accrued. On a typical loan, an extra $100 a month saves several hundred in interest and clears it close to a year early.
›Is it better to pay extra monthly or in a lump sum?
Earlier is better in both cases, because interest accrues on the balance. A lump sum now beats the same amount spread over a year, but consistent monthly overpayments are easier to sustain and still compound.
›Are there penalties for paying off a car loan early?
Sometimes. Some agreements carry a prepayment penalty, and others apply overpayments to the next instalment instead of the principal, which saves nothing at all. Confirm with the lender that extra payments reduce the principal.
›Should I pay off the car or invest instead?
Compare the loan APR against what you would realistically earn after tax. A 3% manufacturer rate is rarely worth clearing early; a 12% used-car rate almost always is.