Enter the remaining balance, APR and monthly payment on a car loan to get the payoff time and total interest, and see the effect of adding an extra monthly payment.
The loan is amortised month by month: interest is charged on the balance at the monthly rate (APR divided by 12), the rest of the payment reduces the balance, and the simulation runs until the balance reaches zero, capped at 600 months. The same simulation is run with and without the extra payment so the months saved and interest saved are a direct comparison. The payoff date counts forward from the current month. The result is an estimate based on the figures entered: it assumes the APR and payment stay fixed, no fees or penalties apply, and extra amounts are paid every month without fail. A payment that does not cover the first month interest can never clear the loan, so the calculator reports that instead of a payoff date.
How does an extra monthly payment save interest? Interest is charged on the outstanding balance each month. An extra payment reduces the balance sooner, so every later month is charged interest on a smaller amount and the loan also ends sooner, which removes whole months of interest.
What if the payment does not cover the interest? The balance would grow instead of shrinking and the loan would never be repaid. The calculator detects this case and shows an error rather than a payoff date; the payment, or the payment plus extra, has to exceed the monthly interest charge.
Does this include early repayment penalties or fees? No. The estimate assumes no fees, penalties or rate changes. Loan agreements differ, so the lender terms govern what an extra payment actually saves.