How much extra should you pay on a car loan to pay it off a year early?
The extra monthly payment that cuts a year off a typical car loan, and how much interest that actually saves.
On a typical 5-year, $28,000 car loan at 7% APR, paying an extra $85 a month cuts about a year off the loan and saves roughly $410 in interest. The exact number depends on your rate, balance, and term — the math below shows how to get your own figure in seconds instead of guessing.
Why a flat extra payment removes more than one month per month
Every dollar paid above the required minimum goes straight to principal, since the interest portion of that month's payment was already fixed by the balance going in. Removing principal early means every future month's interest charge is calculated on a smaller balance, so the loan's last several months — which on the original schedule are almost pure principal already — get skipped entirely. That compounding effect is why $85/month across a 5-year loan removes closer to 12 months than the naive "$85 × 60 months ÷ payment" estimate would suggest.
Worked example: $28,000 at 7% over 60 months
- Standard monthly payment: $554.60
- Total interest over the full 60 months: $4,896
- With +$85/month starting from payment 1: payoff in ~48 months, total interest ~$4,486
- Interest saved: ~$410; time saved: ~12 months
Run your own loan's numbers — balance, rate, and term all change the exact break-even — with the amortization calculator below.
Where the extra payment matters most
Extra payments made earlier in the loan save more interest than the same dollar amount paid later, because early payments avoid more months of compounding on that principal. If cash flow only allows an occasional lump sum rather than a fixed monthly add-on, putting it toward the loan as early as possible captures most of the same benefit.
The math behind it
This is standard loan amortization: each payment splits into interest (balance × monthly rate) and principal (payment − interest), and extra principal payments reduce the balance used in every subsequent month's interest calculation. ExactCalcs' amortization and payment calculators run this schedule exactly, month by month, rather than approximating it.