Transparent method
The formula
Worked example
Example inputs
How to interpret the result
The payment required for a chosen payoff horizon rises faster than the horizon shrinks in a linear way, because interest keeps accruing on the balance the whole time. Cutting the payoff timeline in half doesn't require double the payment; it typically requires more than double, since less time also means less benefit from the balance naturally shrinking along the way.
Before you rely on it
What to check
Compare the required payment at a couple of different payoff horizons before committing to one, since the relationship between timeline and payment isn't a straight line.
The common error
Where people go wrong with debt payoff date calculator
Assuming halving the payoff timeline simply doubles the required payment. Interest accrual on the still-large balance during a shorter timeline means the actual required payment increase is usually more than proportional.
Sensitivity evidence
How annual interest rate changes the required monthly payment
| Annual interest rate | Required monthly payment | Total interest |
|---|---|---|
| 14.0% | $513 | $3,456 |
| 16.0% | $527 | $3,985 |
| 18.0%worked example | $542 | $4,522 |
| 20.0% | $557 | $5,068 |
| 22.0% | $573 | $5,623 |
Every input, tested
Which input moves the required monthly payment most
| Input | Tested from | To | Required monthly payment at each end | Swing |
|---|---|---|---|---|
| Target payoff time | 27.0 months | 45.0 months | $680 to $461 | $219 (40%) |
| Balance | $13,500 | $16,500 | $488 to $597 | $108 (20%) |
| Annual interest rate | 16.0% | 20.0% | $527 to $557 | $30 (5.6%) |
Two variables at once
Required monthly payment by annual interest rate and balance
| Annual interest rate \ Balance | $12,000 | $15,000 | $18,000 |
|---|---|---|---|
| 14.0% | $410 | $513 | $615 |
| 16.0% | $422 | $527 | $633 |
| 18.0% | $434 | $542 | $651 |
| 20.0% | $446 | $557 | $669 |
| 22.0% | $458 | $573 | $687 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Balance | $15,000 |
| Annual interest rate | 18.0% |
| Target payoff time | 36.0 months |
| Required monthly payment | $542 |
| Total interest | $4,522 |
Where the inputs come from
Enter the current balance, the annual interest rate and the number of months by which you want the debt gone. This works for any fixed-rate debt: credit cards, personal loans, medical bills on a payment plan or a car loan you want to finish early. Use the rate on your statement and the balance on the date you start. The tool assumes you do not add new debt.
Using the required monthly payment in a real decision
A date tied to an event, such as a wedding or a move, is easier to stick to.
When the result stops applying
The payment covers principal and interest only for a fixed rate. Variable rates, new borrowing and missed payments change the outcome. If the debt is a loan with a prepayment penalty, paying early may cost extra. For multiple debts, allocate the payment among them with a strategy such as the avalanche.
What to compare it with
Test the timeline with the debt-free date calculator, and compare payoff options with the balance transfer and debt consolidation pages. The credit card payment calculator uses the same formula. Build the payment into your budget and automate it so it happens before spending.
People also ask
Frequently asked questions
What is the difference between a payoff date and a minimum payment?
The minimum is set by the lender and usually stretches the debt for years. A payoff date is your own target and requires a fixed, higher payment.
Can I use this for a car loan?
Yes, for a fixed-rate loan. It shows the payment to finish early, but check for prepayment penalties and that extra payments go to principal.
What if I have several debts?
Run each, or combine them. Paying the highest-rate debt first saves the most interest, and the rest can carry minimums until it is gone.