How a payoff amount is calculated
Payoff amount = principal balance + interest since your last payment + any prepayment penalty. Most installment loans charge simple interest daily: per diem interest = balance × yearly rate ÷ 365, or ÷ 360 for some lenders. Each day between your last payment and the day the lender receives your money adds one day's interest.
A payoff quote is good through a stated date. Pay later and you'll owe more interest, so ask for a new quote.
Worked example
You owe $12,000 at 9%, 15 days after your last payment, with 36 payments left. Daily interest is $2.96, so $44.38 has built up and the payoff amount is $12,044.38. Keeping the loan would cost $13,737.48 more in payments, so paying off now saves $1,693.10.
With a 2% prepayment penalty ($240), the payoff amount is $12,284.38 and you save $1,453.10.
Prepayment penalties
A penalty can be a percentage of the balance, a number of months' interest or a flat fee. It's set by your loan contract and state law, and most personal loans don't have one. Federal credit unions can't charge one, and lenders can't use the Rule of 78s to calculate the interest refund on precomputed consumer loans longer than 61 months (15 U.S.C. 1615).
Near the end of a loan, little interest is left, so a penalty can cost more than you save. The calculator shows the saving after the penalty so you can check.
To pay off faster with extra payments instead, use the US loan payoff calculator .
What this calculator assumes
It covers fixed-rate installment loans with equal monthly payments. The balance is the principal after your last payment, and the payments left are what you'd still make if you kept the loan. Mortgages follow separate prepayment penalty limits under Regulation Z §1026.43(g), and add-on or precomputed loans can refund interest differently.
Borrowing in the UK?
The country choices above the inputs open separate local pages. UK law sets how the interest rebate is worked out and caps any early repayment charge. Choosing United Kingdom opens that page and resets the inputs; amounts are not converted.
For a loan from a UK lender, use the UK loan early repayment calculator in pounds.
Inputs for the US loan prepayment penalty calculator
Principal balance
The principal left after your last payment, from your statement or online account.
Interest rate
The yearly note rate on your loan, not the APR if you paid fees upfront.
Payments left
How many monthly payments you'd still make if you kept the loan. Used to show what paying off saves.
Days since your last payment
Days from your last payment to the day the lender will receive the payoff.
Daily interest basis
Most consumer loans divide the yearly rate by 365 days. Some lenders use 360, which makes each day slightly dearer.
Prepayment penalty
Choose the type your contract uses, then enter its rate, number of months or fee. Choose None if there's no penalty.
Penalty rate
For a percentage penalty, the share of the balance charged.
Months of interest charged
For an interest penalty, how many months of interest on the balance are charged.
Penalty fee
For a flat-fee penalty, the amount in US dollars.
CALCULATOR QUESTIONS
US loan payoff and prepayment penalty calculator questions
How do I calculate my loan payoff amount?
Take your principal balance, add the daily interest (balance × rate ÷ 365) for each day since your last payment, and add any prepayment penalty.
What is per diem interest?
It's one day's interest on your balance. On $12,000 at 9% it's about $2.96 a day.
Do personal loans have prepayment penalties?
Most don't, but some do, especially older, subprime or secured vehicle loans. Your loan contract says whether yours has one and how it's calculated.
Is it worth paying off a loan early with a penalty?
Compare the interest you'd avoid with the penalty. If the saving after the penalty is positive, paying off early still saves money.