There’s almost no better feeling on your financial journey than the day you pay off a loan.
Whether it’s your credit card, your need to refinance student loans or your mortgage, you should celebrate the big win of paying off a loan.
The best part of paying off a loan is knowing that it’s one less dollar that you owe to someone else.
The second best part of paying off a loan is knowing that you can know invest that same dollar into your future — building your emergency fund, saving for a goal or socking it away for retirement (in index funds, of course).
Determining Your Loan Pay Off Date
Sometimes it can seem like forever until your loans are paid off, especially if you’re only able to pay the minimums each month.
While there are definitely ways to speed up paying off your loans — increasing your payment or putting any windfalls toward the loan — it’s worth knowing exactly when you’ll be finished paying the loan.
Knowing when you’ll finish paying your loan does two things for you:
- It gives you an understanding of how long this loan will exist
- It gives you insight into what you need to do if you want to finish paying off the loan sooner
Financial Calculators You Should Use
To calculate when you’ll finish paying your loan, there’s a number of calculators you can try.
Bankrate has a great Student Loan Calculator, for example. Simply enter your loan amount, length of loan (years or months), and interest rate per year. You’ll get a breakdown of your monthly payments along with an Amortization Schedule — the chart that shows you the exact month your loan will be paid off, how much money goes toward principal and interest, and the amount remaining on your loan. If you’re thinking about refinancing your student loan, check out Student Loan Planner’s Refinance Calculator.
Credit Karma has its own debt repayment calculator, which you can use to figure out how long it will take you to pay back a credit card. Enter the balance owed, interest rate, and either your expected monthly payment or how long you want to take to pay off the credit card, and it’ll tell you how much it’ll cost you (and how long it’ll take to pay, if you entered a monthly payment amount).
As I’ve written about before, paying extra to your mortgage can save you a ton of money — especially over 30 years. We’re doing bi-weekly mortgage payments, and it’s going to save us almost $40,000 and 8 years on our mortgage. Bankrate’s Biweekly mortgage calculator can break down the numbers for you.
While these calculators tend to be focused on US dollars, international financial calculators exist as well. If you’re in Norway, you can calculate your consumers loans repayment schedule at norskkreditt.no. In Europe, the CCPC provides a Euro loan calculator. And in Australia, Aussie has a Home loan repayment calculator for your mortgage.
Taking the Next Steps
Now that you know WHEN your loan will be paid off, it’s important to take that next step and seriously committing yourself to paying it off.
While there may be times when you have no other option than paying your minimum payment each month, do what you can to speed up that payment date: cut your lifestyle where you can and use those savings as payments, sell things you don’t need, and use any windfalls as extra payments.
Remember: nothing feels better than paying off your loan. Once you have that feeling, you’ll know why.
Photo by Volkan Olmez on Unsplash
