Loan Payoff Calculator
This calculator shows how much faster a fixed-rate loan is paid off when you add an extra monthly payment, and how much interest that saves. Enter your own numbers — the defaults are examples.
How this calculator works
Paying a little extra each month shortens the term and cuts the interest, because every extra dollar reduces the balance that interest is charged on. The saving is largest when the extra payments start early.
Formula: this calculator runs the amortisation schedule twice. The baseline uses the scheduled payment P × r / (1 − (1 + r)^−n). The faster run adds the extra amount to every payment. For each period, interest = balance × r and the rest of the payment reduces the principal. The difference in the number of payments is the months saved; the difference in total interest is the interest saved.
Even a modest extra payment can help. Adding $100 a month to a $20,000 loan at 9.99% over 60 months pays it off several months early and saves hundreds of dollars in interest.
Before you commit, check your loan agreement for a prepayment penalty or an interest-rate differential. Some fixed-rate loans in Canada charge a penalty if you pay them off early, which can wipe out the saving. If your loan allows extra payments without a penalty, an automatic transfer on payday is the simplest way to stay consistent.
This is an illustration using the numbers you enter, not a quote or a repayment plan from a lender. Confirm the exact payoff amount with your lender, because it depends on the daily interest accrual up to the date you pay.
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Frequently Asked Questions
Does an extra payment reduce interest immediately?
It reduces the balance, and interest is charged on the balance, so the saving begins with the next period.
Will I be charged a prepayment penalty?
Possibly. Some fixed-rate loans charge a penalty or an interest-rate differential for early repayment. Check your agreement before paying extra.
Is it better to pay extra monthly or in a lump sum?
Both reduce the balance. A lump sum early in the term saves more interest than the same total spread out later, but monthly extras are easier to sustain.
What if I miss an extra payment?
The calculator assumes the extra is paid every month. If you skip some, the term and the saving will be smaller than shown.
Last updated: September 16, 2026 · By the Instalment.ca Editorial Team
We research Canadian lending rules and update these pages when the law, the data, or the available offers change. We are not a lender and we do not provide personal financial advice.
Instalment.ca is a loan matching and comparison service, not a lender.
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This is general information, not financial, legal, or tax advice.
Rates and terms vary by lender, creditworthiness, and province. Figures shown are examples only.