Bankrate Auto Payoff Calculator
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Reviewed by Calculator Editorial Team
Use this Bankrate Auto Payoff Calculator to determine how long it will take to pay off your auto loan with extra payments. Simply enter your loan details and see how much time and money you'll save by accelerating your payoff.
How to Use This Calculator
To use the Bankrate Auto Payoff Calculator, follow these simple steps:
- Enter your current loan balance in the "Loan Balance" field.
- Input your current monthly payment in the "Monthly Payment" field.
- Specify your loan interest rate in the "Interest Rate" field.
- Enter any additional monthly payments you plan to make in the "Extra Monthly Payment" field.
- Click the "Calculate" button to see your payoff timeline and savings.
The calculator will display your original payoff date, new payoff date with extra payments, total interest saved, and months saved. It will also show a chart comparing your original and accelerated payoff schedules.
Formula Used
The Bankrate Auto Payoff Calculator uses the following formulas to calculate your loan payoff timeline:
Original Payoff Months
Original Payoff Months = (Loan Balance × (Interest Rate/1200)) / (Monthly Payment - (Loan Balance × (Interest Rate/1200)))
Accelerated Payoff Months
Accelerated Payoff Months = (Loan Balance × (Interest Rate/1200)) / (Monthly Payment + Extra Payment - (Loan Balance × (Interest Rate/1200)))
Total Interest Saved
Total Interest Saved = (Original Payoff Months - Accelerated Payoff Months) × (Monthly Payment - (Loan Balance × (Interest Rate/1200)))
Where:
- Loan Balance = Your current auto loan balance
- Monthly Payment = Your current monthly payment amount
- Interest Rate = Your loan's annual interest rate
- Extra Payment = Additional monthly payments you plan to make
Worked Example
Let's look at an example to see how the Bankrate Auto Payoff Calculator works. Suppose you have an auto loan with the following details:
- Loan Balance: $25,000
- Monthly Payment: $400
- Interest Rate: 5.5%
- Extra Monthly Payment: $100
Original Payoff Calculation
First, calculate the original payoff months:
Original Payoff Months = ($25,000 × (5.5/1200)) / ($400 - ($25,000 × (5.5/1200)))
= ($25,000 × 0.004583) / ($400 - $114.58)
= $114.58 / $285.42
= 40.17 months (3 years and 4 months)
Accelerated Payoff Calculation
Next, calculate the accelerated payoff months with the extra payment:
Accelerated Payoff Months = ($25,000 × (5.5/1200)) / ($400 + $100 - ($25,000 × (5.5/1200)))
= ($25,000 × 0.004583) / ($500 - $114.58)
= $114.58 / $385.42
= 29.74 months (2 years and 11 months)
Savings Calculation
Finally, calculate the total interest saved:
Total Interest Saved = (40.17 - 29.74) × ($400 - $114.58)
= 10.43 × $285.42
= $2,967.66
In this example, making an extra $100 per month would pay off your loan 10.43 months (2 years and 11 months) earlier and save you $2,967.66 in interest.
Auto Loan Payoff Strategies
There are several strategies you can use to pay off your auto loan faster and save money on interest:
1. Make Biweekly Payments
Instead of making monthly payments, consider making biweekly payments (every two weeks). This approach gives you an extra payment every year, which can significantly reduce your payoff time and interest costs.
2. Round Up Your Payments
Round up your regular payments to the nearest $50 or $100. For example, if your monthly payment is $423, round it up to $450. The extra $27 per month can make a big difference over time.
3. Pay Off Your Loan in Full
If you have the means, consider paying off your auto loan in full. This will eliminate all interest charges and give you the car outright, saving you money in the long run.
4. Refinance Your Loan
If interest rates have dropped significantly since you took out your loan, consider refinancing to a lower rate. This can reduce your monthly payments and pay off your loan faster.
5. Use a Balance Transfer Card
If you have a high-interest credit card balance, consider transferring it to a balance transfer card with a 0% introductory APR. This can help you pay off your credit card debt faster and free up more money for your auto loan.
Frequently Asked Questions
How does making extra payments affect my loan payoff date?
Making extra payments reduces your loan balance faster, which means you'll pay off your loan sooner. The Bankrate Auto Payoff Calculator shows you exactly how much time and money you'll save by making extra payments.
Is it better to make extra payments at the beginning or end of my loan term?
Making extra payments at the beginning of your loan term is generally more beneficial because you'll pay down more principal and reduce the overall interest you'll pay. However, making extra payments at any time will still save you money and time.
Can I use the Bankrate Auto Payoff Calculator for any type of loan?
Yes, the Bankrate Auto Payoff Calculator can be used for any type of loan, including auto loans, personal loans, and home equity loans. Simply enter your loan details and the calculator will show you how making extra payments can help you pay off your loan faster.
How accurate is the Bankrate Auto Payoff Calculator?
The Bankrate Auto Payoff Calculator uses standard loan payoff formulas to provide accurate results. However, actual results may vary based on your specific loan terms and conditions.
Can I use the Bankrate Auto Payoff Calculator to compare different payoff strategies?
Yes, the Bankrate Auto Payoff Calculator allows you to compare different payoff strategies by adjusting the extra payment amount. This helps you see which approach will save you the most time and money.