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Loan Payoff Calculator: Overview
This loan payoff calculator lets you know much more than the date that you’ll be free of student debt.
It also teaches you just how quickly you can reclaim your financial freedom by being strategic about your loan repayments to reduce the life of the loans you have.
According to the Chamber of Commerce, in 2016, the average student loan debt of borrowers was just north of $31,000.
Knowing how to pay off student loans fast involves more than just sticking to your monthly payment amount.
The key is to be smart and make the most out of any and every loan repayment tip available when creating a repayment plan. This way you won’t need to depend on loan forgiveness or variable interest rates.
By combining the best repayment strategies with this student loan payoff calculator, you’ll find out how soon you can lower your student loan balance.
But first, how it works.
Student Loan Calculator: Interest Rates, Loan Term, and Loan Amount
In order to use this loan payoff calculator, you need some basic information. This will include:
- The loan amount of your public and private loans
- Its interest rate
- How much you expect to pay monthly on the loan term
You input those figures in the corresponding fields, click ‘Calculate’, and the student loan calculator payoff generates results.
These will inform you of the months or years that it will take to pay off the private or federal loan. Also, the results will tell you the total amount of interest you will have paid on the loan balance once it’s paid off.
For argument’s sake, let’s say you took a student loan of $30,000 at an interest rate of 5%. In order to repay that loan, your loan provider mandates that you put a minimum of $500 monthly.
In such a scenario, you would have paid $500 on the loan for 69 months and have paid $4,580.89 in interest.
However, you can reduce the time and money you invest in repaying that loan by making extra payments or even using an income-based repayment plan.
Student Loan Payment on Your Loan Balance
Using the same example above, let’s imagine that you put an extra $100 on your monthly student loan payment.
That would mean that you’d end up paying $600 instead of $500 monthly.
Granted, depending on your monthly earnings, making the extra payment of $100 every month might be a squeeze.
However, if you can afford to, the benefits are worth it.
For starters, you would reduce your total interest payments from $4580.89 to $3698.16. That’s nearly a $1000 difference.
What’s more, you’ll be able to get rid of your debt in 56 months in comparison to the time that you would have taken making regular payments.
In summary, the more you put down on your payments, the less you end up paying on interest. Most importantly, you get one step closer to financial freedom.
That said, you should never bite off more than you can chew. If you can’t afford to put more down on your loan balance monthly payments, don’t do it. Only pay more if your finances allow you to.
Student Loan Calculator Payoff – Additional Tips
Apart from what has already been discussed, there are other solid student loan repayment tips that are worth mentioning.
All of these tips should be used in tandem with a loan payoff calculator. That way, you get to keep track of your loan repayment strategy and monitor its progress.
Here are a few of the tips below:
- Refinancing Your Student Loans – Refinancing a loan means that you replace an existing loan with another one that is less costly to repay.
When you refinance a loan, usually, you get to renegotiate terms in your favor, such as getting a lower interest rate or fusing multiple existing loans into one.
- Automating Loan Payments – Several lenders are offering discounted interest rates for persons who authorize their banks to make automatic deductions from their account for student loan repayments. If your lender offers this incentive, you’ll be able to cut back on the expenses that you will incur on student loan repayments.
- Using Windfalls For What They’ve Worth – If you get extra cash, be wise and put that money towards your loan repayment. That way, you reduce your compound interest and pay less on your private student loans in the long run.
Remember that with a student loan payoff calculator, you can stay on top of your finances irrespective of the loan repayment strategy that you’ve chosen.