Debt Payoff Calculator
Use the debt payoff calculator or debt repayment calculator to explore how to pay off your debt using different debt repayment strategies.
After setting your target, this device will provide you with all the relevant details for your given debt payoff strategy. You can check, for example, how much interest you would pay or what would be your total debt's APR if you aimed to get rid of your debt in the fastest way, or merely want to pay the monthly minimum.
Moreover, you can set an optional monthly payment tailored to your financial budget, and compare your results with those of other repayment options.
What's more, you can check the repayment schedule table to learn how the loan amortization process allocates your monthly payment between the interest and the principal.
Read on to see how to pay off debt fast and learn the differences between different debt payoff strategies, such as the debt snowball vs. avalanche method. We also explain how you can easily use this tool as a debt payoff planner.
Note that this debt payoff calculator only considers the repayment options of multiple debts (at least two). If you only have one obligation or a loan, you may try our loan repayment calculator
You may also consider refinancing some of your loans and employing our refinance calculator.
How to choose the best debt repayment strategy: make a debt repayment plan
You may set different goals when making a debt repayment plan depending on your financial situation or preference. The most common debt payoff strategies are the following:
- Minimum payment: While this allows you to use as little of your monthly budget to pay off debt as possible, it generally results in the highest financial charge.
- Snowball method: Turn to this option to reduce the number of debts.
- Avalanche method: This option can help you pay the lowest amount of interest.
- Debt consolidation: Consolidating your debt may help you restructure and simplify your monthly payments, providing more beneficial interest charges with shorter repayment terms or lower monthly payments.
Debt snowball vs avalanche
The main difference between debt snowball vs. avalanche is that the snowball method prioritizes debt elimination over a lower interest payments.
In other words, when you get rid of one of your debts or have some spare money to put towards debt repayment. The snowball method allocates the extra cash for the debt with the lowest balance, while the avalanche method uses it on the debt with the highest interest rate.
Therefore, while with the avalanche method, you pay the lowest amount of interest, the snowball method allows you to reduce the number of debts faster.
How to use the debt repayment calculator
Follow the instructions below to apply the debt payoff calculator to your preferences and financial situation.
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Number of debts: For the first step, you need to set the number of debts you have. Note that the maximum number of debts is six and that you must have at least two debts to apply the debt repayment calculator.
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Debt specifications: Provide the debt balances with their related interest rates and monthly payment amounts. Note that the monthly payments you set should be the minimum required, and we suppose that you can always increase them.
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Repayment specification
In this section, you can set your aim for debt repayment:
- Pay the minimum amount monthly;
- Reduce the number of debts — snowball;
- Pay the highest interest — avalanche;
- Consolidate with a new monthly payment; and
- Consolidate with a new payoff term.
If you choose the consolidation option, you need to set the interest rate of your new consolidation loan and the new monthly payment or payoff term.
- Payoff summary
You can read the main details of your preferred debt payoff strategy and compare the result with the minimum payment method.
Simple interest vs compound interest in debt repayment
When planning debt repayment, it’s essential to understand how interest affects the total amount you pay over time. Some debts use simple interest, where interest is calculated only on the original loan amount. Others use compound interest, meaning interest is added to the balance regularly (monthly/quarterly/annually), causing you to pay interest on top of interest.
Disclaimer
You should consider the debt payoff calculator as a model for financial approximation. All payment figures, balances, and interests are estimates based on the data you provided in the specifications, which are, despite our best effort, not exhaustive.
For this reason, we created the calculator for instructional purposes only. Yet, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive helpful feedback and advice.
FAQs
How do I pay off debt fast?
To pay off your debt quickly:
- Make more than the minimum payment each month. This will reduce the balance faster.
- Focus on paying off the highest-interest debts first (the avalanche method).
- Make additional payments.
Who pays debt when you die?
When you die, your debts are usually paid from your resources. However, this can vary based on the country you live in. Some places may hold surviving spouses or family members responsible.
Which debt should I pay off first?
Typically, you should pay off the debt with the highest interest rate first to save the most money, but some people prefer to pay off the smallest balance first to stay motivated. This is known as the snowball method.