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Debt Reduction

Free to use, runs entirely in your browser — no email, no signup.

The purpose of this Debt Reduction calculator is to illustrate how an extra monthly payment amount will shorten the amount of Interest paid and the number of months to pay it. When you make a payment higher than your required monthly payment it is applied directly to principal. This can be used for any type of loan.



Tutorial for the Debt Calculator below.

Input

To use this calculator to enter What You Owe (in dollars), Interest Rate, and Current Monthly Payment, and an amount of $0 or greater which represents the Extra Payment you will send in each month.

Results

The results will show you the Time Savings : how many months you have saved, and the Money Saved : how much you have saved in interest. The results are also expressed in a sentence so it is easier to understand. There is also a table to show you the amount you would be paying each month and how it pays down the loan broken into principal and interest payments.

Your Results

Current Payoff Term (months)
New Payoff Term (months)
Time Reduction(months)
Current Interest Cost
New Interest Cost
Interest Saved
Interest Charges Saved

If you add to your monhtly payment, you will pay off this debt in payments instead of , and you will save in interest.


How we calculate interest

This calculator uses a monthly interest rate equal to your APR divided by 12 (a 24% APR becomes 2% per month). That is exactly how U.S. credit card companies and most lenders charge interest each month, so the totals here reflect what you would really pay.

If another calculator shows you a different number, it is almost always because it converts the rate a different way. Some use an “effective annual” formula — (1 + APR)1/12 − 1 — which gives a slightly lower monthly rate and makes debt look cheaper and quicker to pay off than it actually is. Others compound daily (APR ÷ 365), which runs a few dollars higher. We deliberately use the plain APR ÷ 12 method because it matches your statement. Small differences between tools are normal and come down to this single choice.