Auto Loan Payoff Calculator

Check which kind of loan you signed first. Almost all mainstream auto loans are simple interest: interest accrues daily on whatever you currently owe, so every extra dollar of principal immediately reduces what accrues tomorrow. A minority — mostly older or subprime contracts — are precomputed, sometimes under the name Rule of 78s. There the total interest is fixed at signing and weighted toward the early months, so paying off early refunds only part of it. Everything on this page assumes simple interest.

The term is short, so the leverage is small. A mortgage runs 360 months, which gives an extra payment three decades to compound against the balance. A car loan has 48 or 60. The same discipline that saves six figures on a house saves hundreds to low thousands here — worth doing, but rarely the highest-value place for a spare $200 if you are carrying card debt.

Equity is the reason people actually do this. A new car loses value far faster than the loan amortizes in the first two years, so many borrowers owe more than the car is worth. That gap is what makes a total loss or an unplanned sale expensive: insurance pays the car's value, and you owe the rest. Extra principal closes the gap sooner, which is a risk reduction the interest number alone does not show.

Take a $28,000 balance at 7.5% with 48 payments left. The scheduled payment is $677 a month, and riding out the schedule costs $4,496 in interest. Here is what four approaches to the same loan produce:

Now add the car itself. If that $28,000 balance sits against a car worth $24,000, you are $4,000 underwater. At roughly 15% annual depreciation, the normal schedule leaves you underwater until about month 17. The extra $200 a month gets you above water by month 10 — seven months of exposure removed, on top of the $1,167.

When the rate is genuinely high. Auto rates spread widely by credit tier. At 11–14%, extra principal is a strong guaranteed return and worth prioritising. At a promotional 0–3%, it is close to pointless — the money does more in an emergency fund or a retirement account.

When you are underwater and have no gap coverage. This is the case where the interest saved is beside the point. If the car were totalled tomorrow, insurance pays its market value and you owe the difference in cash on a car you no longer have. Closing that gap early — or buying gap insurance — removes a real risk.

Not before higher-rate debt or the match. A credit card at 22% and an unclaimed employer 401(k) match both beat a 7.5% auto loan comfortably. Work down the rate ladder rather than paying off whichever loan feels most satisfying to close.

Depreciation is modelled as a steady 15% a year, which is a reasonable average but not your specific car — condition, mileage, and model hold value very differently. Check a current valuation before treating the equity crossover as precise. For the strategy behind these numbers, read how to pay off a car loan early.