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Practical guide to early loan repayment: formulas, workflow, implementation pitfalls, and a direct execution playbook with Loan Calculator.
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Calculate payment, total interest, fees, and early repayment savings.
When you have several debts and limited extra cash, two strategies dominate:
Avalanche (highest rate first): minimizes total interest paid.
Snowball (smallest balance first): delivers quick wins for motivation.
| Debt | Balance | Rate | Min Payment |
|---|---|---|---|
| Credit card | $5,000 | 22% | $150 |
| Car loan | $12,000 | 7% | $350 |
| Personal loan | $3,000 | 15% | $100 |
Total minimum: $600/month. You have $200 extra to allocate.
Put the $200 extra toward the credit card (22%):
Total interest paid: ~$3,440
Total time: ~40 months
Put the $200 extra toward the personal loan ($3,000 — smallest balance):
Total interest paid: ~$4,640
Total time: ~42 months
Avalanche saves $1,200 and finishes 2 months sooner. But snowball delivers the first zero-balance 6 months earlier — and that psychological momentum matters. Studies show people using snowball are more likely to actually complete repayment.
Best of both worlds:
In our example: the personal loan at $3,000 is close enough. Pay it off in 10 months for the win, then avalanche the credit card. You lose ~$400 vs pure avalanche but gain the behavioral benefit.
Model your debt payoff scenarios in the Loan Calculator. Related: APR with Origination Fees.
This material is for informational purposes only. Results from this article and tool are approximate estimates, not financial, tax, legal, or investment advice. Actual payments, APR, taxes, fees, and eligibility depend on your lender, jurisdiction, and personal profile. Confirm key decisions with official disclosures and a licensed professional.
This article is reviewed by the Tools Hub editorial team for factual accuracy, practical relevance, and consistency with current product workflows.
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