Pay Off Loan or Invest Calculator
Got extra money each month — should you pay off the loan or invest it? Enter your numbers and see both strategies simulated month by month: time to debt-free, total interest paid, and who ends up with more. Everything runs in your browser — nothing is uploaded.
Your numbers
Result
| Pay loan first | Invest the extra | |
|---|---|---|
| Debt-free after | ||
| Total loan interest paid | ||
| Net worth at horizon |
How this calculator works
Both strategies spend the same total cash every month: your minimum payment plus the extra. Pay loan first throws everything at the loan; once it's gone, the entire monthly amount is invested. Invest the extra pays only the minimum and invests the extra from day one. Both run to the same finish line — the month the minimum-only loan is paid off — so the net-worth comparison is apples to apples. Interest and returns both compound monthly, and contributions are credited at month end; any surplus in a final loan payment is invested that same month.
Why does the winner depend on the rates?
As a rule of thumb, if your expected investment return beats the loan APR, investing tends to come out ahead; if the APR is higher, paying the loan first wins. The margin also depends on how long the money compounds, which is why this tool simulates your actual payment schedule instead of just comparing the two percentages. When the rates are equal the two strategies land within pennies of each other.
What does this simplify away?
A lot, deliberately: it ignores taxes (interest deductions, capital-gains tax on the investments), investment risk and volatility (the default 7% is a common long-run stock-market assumption, not a guarantee — real returns swing wildly year to year), employer retirement match (free money that usually beats both options), loan fees or prepayment penalties, inflation, and the value of an emergency fund. It also assumes your rates stay fixed for the whole period. Guaranteed interest saved is not the same thing as hoped-for market returns.
Is this financial advice?
No. This is an educational estimate only, not financial, investment, or tax advice, and it knows nothing about your situation. Talk to a qualified adviser before making real decisions, and see the SEC's investor.gov compound interest calculator for a neutral reference on how compounding works.
Do my numbers get uploaded?
No. The page is fully client-side; the simulation runs in your browser and nothing you type leaves it.