Pay Off Car Loan Early Calculator
The loan, the contract it was written on, and what you add
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the balance you owe today, the APR and the number of payments left, from your latest statement or the lender's website.
- 02
Enter the loan's original term from your contract. It decides how a Rule of 78 rebate would be figured and whether federal law allows that method on your loan at all.
- 03
Add the extra amount you could pay each month, a lump sum you could pay today, or both, and any prepayment penalty the contract charges.
- 04
Read the simple-interest saving and the new payoff date, then the Rule of 78 figure beside it. If you do not know which kind of loan you have, the Truth in Lending disclosure and the contract will say.
- 05
Use the table to compare extra amounts from $50 to $500 a month with your lump sum, and the chart to see how fast the balance falls with and without the extra payments.
Formula
Simple interest: each month, interest = balance × APR ÷ 12. The payment plus the extra pays that interest first and the rest goes to principal, with any lump sum taken off the balance today. Interest saved = interest on the current schedule − interest with the extra payments. Rule of 78: the original finance charge F = the payment × the original term − the amount originally financed, rebuilt from the payment, APR and term. With r payments left out of an original N, the rebate of unearned interest = F × r(r + 1) ÷ [N(N + 1)], and the payoff figure = r × the payment − that rebate. Extra payments build a credit that ends the contract once it covers the payoff figure. Above 61 months, federal law requires a refund at least as large as the actuarial method gives, so the simple-interest saving applies.
Example
A $16,500 balance at 13.93% with 42 of 60 payments left costs $499 a month and $4,442 more in interest. Paying $150 extra a month plus $1,000 today clears it in 2 years 5 months, 13 months sooner, and saves $1,682 of interest on a simple-interest loan: about 32 cents for each of the $5,200 of extra dollars. Written as a precomputed Rule of 78 contract, which federal law allows on a 60-month term, the same payments save only $305, $1,377 less, and today's payoff figure would be $16,770 rather than $16,500. At $500 a month extra the simple-interest saving rises to $2,751 and the Rule of 78 saving to $1,275.
Definitions
- Simple-interest loan
- A loan where interest is charged on the balance you actually owe, so any extra payment that reduces principal cuts future interest at once.
- Precomputed loan
- A loan where the full finance charge is added up front and repaid in level installments. Paying early earns a rebate of unearned interest rather than stopping interest directly.
- Rule of 78
- A rebate method for precomputed loans that treats most interest as earned early. Barred by 15 U.S.C. 1615 on consumer credit over 61 months consummated after September 30, 1993.
- Actuarial method
- Figuring interest on the unpaid balance for the time it was outstanding. It is how a simple-interest loan works and the minimum refund federal law requires on precomputed loans over 61 months.
- Prepayment penalty
- A charge some contracts impose for paying a loan off early. It comes off whatever the early payoff saves.
Good to know
How a simple-interest car loan charges you
On a simple-interest loan, interest is charged on the balance you actually owe, for the time you owe it. Each payment pays that interest first, and whatever is left reduces the balance. That makes the early payments mostly interest. On the default loan, a $16,500 balance at 13.93%, the first month's interest is about $192, so of the $499 payment only about $307 reduces what you owe. As the balance falls, the interest part shrinks and the principal part grows, which is why the balance falls slowly at first and quickly at the end. It also explains why extra payments work so well on this kind of loan. A dollar above the scheduled payment goes straight to principal. From the next month on, interest is charged on a balance one dollar smaller, and so on every month until the loan ends. The saving compounds in your favor for the rest of the loan. On the default figures, $150 a month extra plus a $1,000 lump sum paid today brings the payoff from 42 months to 29 and cuts interest by $1,682, from $4,442 to $2,760. Timing matters for the same reason. A dollar paid today saves more than a dollar paid a year from now, because it stops interest for longer, so a lump sum early in a loan does more than the same money spread across its final months. There is one practical trap. Some servicers treat extra money as an early installment and move your next due date instead of reducing principal. On a simple-interest loan that delays the saving until the loan is paid off. Tell the lender in writing where the extra goes, and check that the next statement shows a lower balance.
The Rule of 78, worked through
A precomputed loan works differently. The whole finance charge is calculated at signing and added to the amount borrowed, and you repay the total in level installments. Nothing you pay later changes the finance charge. What changes it is paying off early, when the lender must refund the part of the charge that is unearned. The Rule of 78 is one way to decide how much that is, and it favors the lender. The name comes from a 12-month loan. Number the months from 12 down to 1 and they add up to 78. The rule treats 12/78 of the finance charge, 15.4%, as earned in the first month, 11/78 in the second, and so on down to 1/78 in the last. Interest is loaded into the early months far more heavily than on a simple-interest loan, where it tracks the declining balance. For a 60-month contract the numbers run from 60 down to 1 and sum to 1,830, and the rebate when r payments are left is the finance charge times r(r + 1) divided by 60 × 61. The default loan shows what that does. Written as a precomputed Rule of 78 contract with 42 of 60 payments left, today's payoff figure would be $16,770 against a $16,500 simple-interest balance: $270 of interest has already been booked as earned that a simple-interest loan would still owe you. The extra payment plan then saves only $305, against $1,682 on simple interest, because the payments do not reduce interest on their own. They only bring the payoff date forward, and by then the rule has already taken most of the finance charge. At $500 a month extra the gap narrows, $1,275 against $2,751, but it never closes.
The 61-month line in federal law
Congress restricted the Rule of 78 in the Housing and Community Development Act of 1992, in a provision now at 15 U.S.C. 1615. For a precomputed consumer credit transaction with a term exceeding 61 months, consummated after September 30, 1993, a creditor that refunds unearned interest on prepayment must use a method at least as favorable to the consumer as the actuarial method. The actuarial method charges interest on the unpaid balance for the time it was outstanding, which is how a simple-interest loan works. The effect is that on any precomputed consumer loan longer than 61 months, paying early must save at least as much as it would on a simple-interest loan at the same rate. The page applies that line to the original term you enter. On a contract over 61 months it shows the Rule of 78 column blank and treats the precomputed saving as equal to the simple-interest one, because the method cannot lawfully cost you more. On a contract of 61 months or less, federal law does not bar the Rule of 78, so the page shows what it would take. Some states restrict the method further, and a contract governed by one of them may use a better method than federal law requires. The line matters more than it might seem, because car loan terms have lengthened well past it: Experian's figures for the second quarter of 2026 put the average new-car loan at 69.5 months and the average used-car loan at 67.9 months. A borrower on a contract of 61 months or less is the one who most needs to read the rebate clause. The Truth in Lending disclosure and the contract will say whether the loan is simple interest or precomputed.
Where an extra dollar does the most
An extra payment on a simple-interest loan earns exactly the loan's rate, with no risk, and it is paid for with after-tax money. On the default loan that is 13.93%, and over the rest of the loan each dollar prepaid saves about 32 cents of interest. Few safe places pay that. But the comparison is not only about rate, because money paid to a lender is hard to get back. You cannot withdraw a prepayment; reaching that cash again means a new loan, if a lender will make one. That makes the order of priorities matter. An emergency cushion comes first, because without one the next repair or lost paycheck goes on a credit card, typically at a rate higher than the car loan. Debt at a higher rate than the car loan comes next, since a dollar there saves more. A retirement plan match, where an employer adds money to what you put in, is usually worth taking before prepaying anything. After those, extra payments on a high-rate car loan are a strong use of spare money, and the table on this page shows how the saving scales from $50 to $500 a month. Two more checks before sending money. Read the contract for a prepayment penalty, which comes straight off the saving; some apply only to a full payoff, so smaller extra payments may avoid it. And find out whether the loan is simple interest or precomputed. On a precomputed contract of 61 months or less that uses the Rule of 78, the same extra dollars save a fraction of what they would on simple interest. There, a refinance to a simple-interest loan at a lower rate may be worth pricing first.
Frequently asked questions
How much interest do I save by paying off a car loan early?
On a simple-interest loan, every extra dollar lowers the balance that interest is charged on, so the saving starts at once. On the default figures, a $16,500 balance at 13.93% with 42 payments left, $150 a month extra plus a $1,000 lump sum pays the loan off 13 months sooner and saves $1,682 of interest.
What is the Rule of 78?
A way of dividing the finance charge on a precomputed loan so that most of it counts as earned in the early months. The name comes from a 12-month loan, whose month numbers add up to 78. Pay off early and the refund of unearned interest is smaller than on a simple-interest loan, so extra payments save much less. In the default example the same plan saves $305 on a Rule of 78 contract, against $1,682 on simple interest.
Is the Rule of 78 legal on car loans?
Federal law, 15 U.S.C. 1615, bars it on precomputed consumer credit with a term longer than 61 months consummated after September 30, 1993: the refund must be at least as favorable as the actuarial method. On terms of 61 months or less federal law does not prohibit it, though some states restrict it. The page applies that line to the original term you enter.
How do I know whether my car loan is simple interest or precomputed?
Read the Truth in Lending disclosure and the contract. Look for the words simple interest or precomputed, and for a clause on the rebate of unearned interest or on prepayment. If the paperwork is unclear, ask the lender in writing how an early payoff is figured, and ask for a payoff quote to compare with your balance.
Why did my extra payment not lower my balance?
Some servicers treat money above the scheduled payment as an early installment and move the next due date forward instead of applying it to principal. On a simple-interest loan that delays the saving. Tell the lender in writing that the extra is to go to principal, and check the next statement.
Should I pay off my car loan or keep the cash?
An extra dollar on a simple-interest loan earns the loan's APR with no risk: 13.93% in the default example, where each dollar prepaid saves about 32 cents over the rest of the loan. But money sent to the lender cannot be borrowed back without a new loan. It usually makes sense to hold an emergency cushion first and to pay down any debt at a higher rate, such as a credit card, before prepaying a car loan.
What if my loan has a prepayment penalty?
Enter it and the page takes it off both savings figures. If the penalty eats most of the saving, ask how it is figured: some apply only to a full payoff, so smaller extra payments may avoid it. Rules on prepayment penalties vary by state.