Car loan payoff calculator

The calculator treats a car loan as an amortising loan with a fixed rate, which is what nearly every HP, PCP and simple-interest auto loan is once the car has been delivered. The monthly rate is i = APR ÷ 12 under the nominal convention or i = (1 + APR)^(1/12) − 1 under the effective convention. From your payment P and balance B it derives the payments left, n = ⌈−ln(1 − i × B ÷ P) ÷ ln(1 + i)⌉, or from the months left it derives the level payment P = B × i ÷ (1 − (1 + i)^−n). Both paths are then simulated month by month: interest round(balance × i) is added, the payment is taken, and any extra for that month comes off what remains. Extra payments always shorten the term here, because a car loan payment is fixed by the agreement; to see a lower payment over the same term instead, use the loan payoff calculator.

Bi-weekly. The fortnightly payment is round(P ÷ 2) and the rate per fortnight is APR ÷ 26 (nominal) or (1 + APR)^(1/26) − 1 (effective). The loan is simulated every two weeks until the balance is zero, and the months elapsed are payments × 12 ÷ 26. The comparison is against the same monthly payment the main calculation used, so the two strips always describe the same loan.

Prepayment penalty and settlement figure. A fixed penalty is added as entered; a percentage penalty is Σ extras × pct. Net saving is interest saved minus the penalty. The settlement estimate is balance × ((1 + i)^(days ÷ 30.4167) − 1) added to today’s balance, with 28 or 58 days of deferment at the monthly rate. It is an estimate because the lender’s figure under the Consumer Credit (Early Settlement) Regulations 2004 rebates interest on the original schedule by the actuarial method; the two usually agree closely on a loan with no arrears or fees, and the lender’s written figure is the one that counts.

Full method, rounding and tests on the methodology page

Yes, but not for the reason the sales pitch usually gives. Paying half your monthly payment every two weeks means 26 half-payments a year, which is 13 full payments rather than 12. The saving comes almost entirely from that thirteenth payment, which is an extra month’s payment going straight to the balance every year; the slightly earlier timing of each half-payment adds only a little. In the worked example 160.00 every two weeks saves 386.23 and 5.4 months on a 58-month loan, and paying 50 extra a month, roughly the same cash over a year, saves more.

Two things decide whether bi-weekly is worth it for you. First, your lender must apply each half-payment when it arrives rather than holding it until the full instalment is due; if it holds the money, you get the thirteenth payment but none of the timing benefit. Second, bi-weekly plans sold by third parties often charge a set-up or per-payment fee, and a fee can wipe out a saving of a few hundred. The arithmetic here assumes no fee; the interest saved figure on this page is the amount any plan fee would come out of. A thirteenth payment made once a year as a lump sum produces most of the same result without a plan, and the lump sum option above shows it for your figures.

In the United Kingdom, hire purchase and personal contract purchase agreements are regulated consumer credit agreements, and section 94 of the Consumer Credit Act 1974 gives you the right to pay off everything you owe at any time. The lender must then rebate part of the interest it would have charged over the remaining term. The Consumer Credit (Early Settlement) Regulations 2004 set the method (the actuarial method, applied to the original repayment schedule) and allow the lender to calculate the figure at a deferred settlement date: 28 days after it receives your request, plus one further month when the agreement still has more than a year to run. That deferment is why a settlement figure is a little more than the balance on your statement, and the calculator’s estimate reproduces it as 28 or 58 days of interest on the balance today.

Settling a PCP is different from settling an HP agreement in one respect: the balance you settle includes the optional final payment (the balloon), so the settlement figure can be close to the car’s value even late in the agreement. Before paying, compare the figure with what the car is worth; if the car is worth more, settling and selling releases the difference, and if it is worth less you are in negative equity (see below). A partial settlement, paying some of the balance early, is also a right under the Act and normally carries no deferment interest; the lender recalculates the remaining payments or the term afterwards. Ireland’s consumer credit rules work in a similar way for HP, with a statutory rebate on early settlement.

The deferment figures are a convention from the Regulations, not an extra charge the lender invents, but they are the maximum the Regulations allow; some lenders use a shorter deferment or none at all. A written settlement figure can be checked against the balance plus the deferment interest shown here, and it is valid only until the expiry date the lender gives.

Negative equity means you owe more on the car loan than the vehicle is worth. It is common in the first two years of a loan with a small deposit, because a car loses value fastest when new while the balance falls slowly. The Consumer Financial Protection Bureau warns that rolling negative equity into a new car loan makes the new loan more expensive, since you borrow more than the next car is worth from day one. Extra payments act on it directly: every unit paid early brings forward the month the balance drops below the car’s value, and the chart on this page shows the balance month by month so you can compare it with a valuation.

Simple interest. Most car loans in the United States, Canada, Australia and New Zealand are simple-interest loans: interest accrues daily on the balance and each payment covers the interest accrued since the last payment, with the rest reducing the balance. Paying early, or paying extra, reduces the interest charged from that day on. The calculator charges interest once a month on the balance, which gives figures a few units out from a daily-accrual statement but the same saving in direction and size; the assumptions list says so. A minority of older or sub-prime auto loans are precomputed-interest loans, where the interest for the whole term is fixed at the start and an early payoff earns a rebate on a formula, so extra payments save less than shown here. Your contract will say which kind you have.

Prepayment penalties. In the United States a car loan may carry a prepayment penalty if the contract and state law allow it; the Truth in Lending disclosure must say whether one applies. Enter it as a fixed amount or a percentage of the amount prepaid and the calculator shows the net saving. UK and Irish regulated agreements do not charge prepayment penalties as such; the deferment interest above is the only extra cost of settling early. If you are weighing the car loan against other debts, the debt consolidation calculator prices a single new loan against keeping the debts separate, and the debt payoff calculator orders several debts by rate or balance.

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• legislation.gov.uk — The Consumer Credit (Early Settlement) Regulations 2004 (SI 2004/1483): settlement date and deferment
• legislation.gov.uk — Consumer Credit Act 1974, section 94: Right to complete payments ahead of time
• CFPB — Should I trade in my car if it’s not paid off? (negative equity)
• CFPB — Auto loans key terms
• CFPB — What is a prepayment penalty? (explained for mortgages; the same disclosure principle applies to auto loans)

Estimates for general information only — not financial, credit or legal advice. Your actual figures depend on your lender’s or card issuer’s exact terms, fees, minimum-payment rules, interest calculation method and any changes they make. Check your statements and speak to a qualified adviser before making decisions. Interest is charged monthly here; most car loans accrue daily, and any settlement figure or payoff quote your lender gives is the one that applies.

Page reviewed October 9, 2026 by the DebtWren team · Methodology · Changelog · Report an error