Debt Payoff Calculator | How Long to Become Debt Free

This debt payoff calculator estimates how long it will take you to pay off a loan based on making the minimum monthly payment. You can also calculate how long it will take to become debt-free if you pay an additional amount on your debt each month.

How the Debt Payoff Calculator Works

The debt payoff calculator has three required fields and one optional field.

Required Fields

Loan Amount: The outstanding balance of the debt. If you have more than one loan, you can enter the total outstanding balances of all of them.
Interest Rate: The Annual Percentage Rate (APR) of the debt. If you have multiple debts, use the weighted average of all of the loans.
Minimum Monthly Payment: The minimum amount that must be paid on the loan each month. If you have more than one loan, enter the total minimum monthly payment of all loans.

Optional Field

Extra Monthly Payment: Here enter any amounts over and above the required minimum payment that you plan to make on your debt.

Debt Payoff Calculator Results

The results show you how many months it will take you to become debt-free. It also shows you the same result in years. Finally, the calculator estimates the amount of total interest you will pay over this time.

Practical Applications of the Debt Repayment Calculator

There are several practical applications of this calculator.

First, it can tell you how long it will take you to become debt-free if you make just the required minimum monthly payments on your debt. This can be useful in assessing whether to make additional payments to meet your financial goals.

Second, the calculator will show you how making additional payments will change your debt repayment plan. Here it's important to consider not only how quickly you'll get out of debt, but also the total interest you'll save by making extra payments.

Third, it can help you set financial priorities. Paying off debt is a critical step in your financial journey, but it's not the only important goal. We should also be saving an emergency fund, investing for retirement, and perhaps saving to buy a home or to pay for a child's education.

This calculator can help you decide how much of your money should go to pay down debt versus these other priorities. While there is no one “right” answer for every person and situation, in the vast majority of cases, paying down debt should not be the only financial goal you pursue.

Credit Card Debt

It's important to understand that credit card debt works differently than installment loans, such as a car, student, or home loan. With installment loans, the required minimum monthly payment remains the same throughout the life of the loan. It remains the same regardless of whether you make extra payments. It also remains the same even as the outstanding principal of the loan goes down.

With credit cards, the current outstanding balance determines the required minimum monthly payment. While the calculation varies from one credit card issuer to another, a minimum payment equal to 2% of the outstanding balance is common in the industry. As a result, the above debt payoff calculator does not apply to credit card debt in which you make just the required minimum monthly payment, as that amount changes from month to month as your credit card balance changes.