Loan Foreclosure Calculator
Calculate how much you can save by paying off your loan early
Calculate Your Savings
Benefits of Loan Foreclosure
Why paying off your loan early might be a smart financial move
Significant Interest Savings
Reduce the total interest you pay over the life of the loan. The earlier you make extra payments, the more interest you save.
Reduced Loan Term
Become debt-free sooner and gain financial freedom. Every extra payment shortens your loan term, sometimes by months or even years.
Improved Cash Flow
Eliminate monthly payments sooner, freeing up cash for savings, investments, or other financial goals once the loan is paid off.
Peace of Mind
Reduce financial stress by removing debt obligations. Many people report significant psychological benefits from becoming debt-free.
Is Early Loan Payoff Right For You?
Factors to consider before making your decision
Consider Prepayment If...
- You have a high-interest loan (typically above 5-6%)
- You have adequate emergency savings (3-6 months of expenses)
- You're already maxing out tax-advantaged retirement accounts
- Your loan has no prepayment penalties, or they're minimal
- You want to reduce financial stress and simplify your finances
Reconsider Prepayment If...
- You don't have an emergency fund yet
- You have higher-interest debt (like credit cards)
- You're not maxing out tax-advantaged retirement accounts
- Your loan has significant prepayment penalties
- You could earn higher returns by investing the money instead
The Opportunity Cost Consideration
When deciding whether to pay off a loan early, consider the concept of opportunity cost — what else could you do with that money?
Simple Rule of Thumb:
If you can reasonably expect to earn a higher return by investing than the interest rate on your loan, investing might be preferable. If not, paying off the loan is a guaranteed return equal to your interest rate.
Remember: Paying off debt is a guaranteed return, while investment returns are never guaranteed. Your personal risk tolerance and peace of mind should factor into your decision.
Pro Tip: Targeted Prepayment Strategy
If you decide to prepay your loan, consider these strategic approaches:
Lump Sum Strategy
Best when you receive a windfall (bonus, tax refund, inheritance). Apply it directly to principal for maximum interest savings.
Regular Extra Payment
Best for consistent income. Add a fixed amount to each monthly payment. Even small additions ($50-100) can significantly reduce the loan term.
Bi-Weekly Payments
Pay half your monthly payment every two weeks. This results in 26 half-payments (13 full payments) per year instead of 12, effortlessly adding one extra payment annually.
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