How to use this debt payoff calculator
Enter your total debt balance, the annual interest rate, and how much you pay each month. The calculator will show you exactly when you'll be debt free and how much total interest you'll pay.
The most powerful feature is the extra payment field. Even adding a small amount — ₹500 or ₹1,000 — to your monthly payment can shave months or years off your debt and save a significant amount in interest.
Two strategies to pay off debt faster
The Debt Avalanche — saves the most money
If you have multiple debts, pay the minimum on all of them, then put every extra rupee toward the debt with the highest interest rate. Once that's paid off, roll that payment to the next highest rate debt.
This method minimises the total interest you pay over time. It's mathematically optimal — but requires patience because you might not see debts disappearing quickly early on.
The Debt Snowball — builds momentum
Pay the minimum on all debts, then put extra toward the debt with the smallest balance first. Once that's gone, roll the payment to the next smallest.
This method isn't mathematically optimal but it builds psychological momentum — eliminating a debt completely feels like a win and keeps you motivated. Research shows people actually stick to the snowball method more consistently, which often results in paying off more debt overall despite higher interest costs.
How much does an extra payment actually save?
Most people underestimate the impact of small extra payments. Here's why they're so powerful: in the early months of a loan, the majority of your payment goes toward interest, not reducing the principal. Extra payments go directly toward the principal — which reduces the base on which future interest is calculated.
The compounding effect works against you with debt — but extra payments work with you to break that cycle faster than you'd expect.
Common types of debt and typical interest rates
- Credit cards: 24-42% per annum — the most expensive debt, pay off first
- Personal loans: 10-24% per annum — high cost, prioritise early payoff
- Car loans: 8-15% per annum — moderate cost
- Education loans: 8-15% per annum — often tax deductible
- Home loans: 8-12% per annum — lowest rate, lowest priority for extra payments
Frequently asked questions
What is the minimum payment I should make?
Your minimum payment should at least cover the monthly interest charge — otherwise your balance will grow even as you make payments. To actually reduce your debt, your payment must exceed the monthly interest. The calculator will warn you if your payment is too low to ever pay off the debt.
Should I invest or pay off debt first?
Compare the interest rate on your debt with the expected return on your investment. If your debt charges 18% and your investment returns 12%, paying off the debt first is the better financial decision — it's a guaranteed 18% return. If your debt is a low-interest home loan at 9% and you can invest in assets returning 12%+, investing may make more sense. High-interest debt (credit cards, personal loans) should almost always be paid off before investing.
Does making bi-weekly payments help?
Yes — making half your monthly payment every two weeks results in 26 half-payments per year, which equals 13 full monthly payments instead of 12. That extra payment per year adds up significantly over a long loan term, especially for home loans.
What happens if I miss a payment?
Missing a payment typically incurs a late fee and may trigger a penalty interest rate on credit cards. More importantly, interest continues to compound on the full outstanding balance. The calculator assumes regular monthly payments — missing even one payment can extend your payoff date meaningfully.
How is monthly interest calculated?
Monthly interest = Outstanding balance × (Annual interest rate ÷ 12). For example, a ₹1,00,000 debt at 18% annual interest charges ₹1,500 in interest the first month (1,00,000 × 18% ÷ 12). As you pay down the principal, the monthly interest charge decreases — which is why the early months feel like slow progress.