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How Long Will It Take to Pay Off My Loan?

Nobody likes knowing they have debt looming over them. Here’s how to figure out how long it will take to tackle yours.

September 15, 2022

Whether you’ve already taken out a loan or you’re shopping around, the sheer size of the numbers involved can often be overwhelming — especially when it comes to mortgages or student loans, which are often the largest debts people have. Some people prefer not to think about their finances, which can be detrimental to their long-term financial health, so if you’re trying to work out the long-term implications of your loans, you’re ahead of the game. 

But you may be wondering, “How long will it take to pay off my loan?” The short answer is that it depends on several factors, including the size and terms of the loan. We’ll run through the most essential elements before explaining exactly how you can calculate your loan payoff time — and reduce it.

How long will it take to pay off my loan? Factors to consider

First of all, it’s important to note that there are different types of loans. They fall into two primary categories: Installment loans and revolving credit

Installment loans

When you take out an installment loan, you borrow a fixed amount of money for a certain loan period at a fixed interest rate for the term of the loan. This means you’ll have predictable monthly payments. Examples include student loans, auto loans, personal loans and home loans.

Since you sign up for a given loan term, you’ll know in advance how long the loan will take to pay off. However, that’s not very helpful if you’re still in the phase of shopping around or you’re wondering how quickly you could pay your existing debt off by making extra payments.

Revolving credit

Revolving loans work a little differently. You’ll have access to a maximum loan amount, but you can borrow up to that amount, repay it and then borrow up to the limit again (and repeat as many times as you want). As a result, your monthly payments depend on how much you borrow in a given month. Typically, the interest rate is also variable. Credit cards and lines of credit fall into this category.

When you take out credit card debt, you should ideally aim to pay it off within the billing period every month to avoid accumulating interest charges. However, if you’re carrying a credit card balance, you can figure out how long it will take to pay it off in full by knowing a few factors about your debt.

How to calculate a debt payoff time frame

Now that you understand the basic considerations you need to make when assessing your loans, it’s time to get more specific. To calculate the debt payoff time frame for credit cards and installment loans, you need to know the following:

  • How much you can afford to pay toward the debt each month

  • The APR for the loan

  • The total or current balance of your loan

Due to compound interest — the interest that accumulates on your interest over time — it can be complicated to calculate debt payoff time. To account for compounding, you’ll need to use something called a natural logarithm function. 

If you really want to do this yourself, you can grab your scientific calculator and use the time-to-pay formula. You can also use the NPER function in Excel to make your own calculator for a slightly easier DIY option.

But for 99% of people, the best option is to use an online loan payoff calculator that will do the math for you. You can also find tools dedicated to specific types of loans (e.g., a mortgage calculator for mortgage loan repayments).

Bear in mind that if you currently have a loan and want to pay it off faster than the loan term you signed up for, you may incur a penalty if your lender charges a prepayment penalty. This is something you need to account for in your calculations, too. 

Calculating how long it will take to pay off a credit card can be tough to get your head around if you have multiple cards with different interest rates. But again, you can use a dedicated credit card repayment calculator to help. In the case of credit cards, you won’t face a penalty for prepayment.

How to pay off your debt faster

You can pay off your debt faster by increasing your monthly loan payments or signing up for a shorter loan term. But if you don’t have the funds, try these strategies instead.

Refinancing or consolidating

The interest rate (or to be more precise, the APR) is one of the biggest factors affecting the size of your monthly payments. If you’ve already taken out a loan, you can either consolidate or refinance it to try and secure a lower rate.

Refinancing involves replacing your current loan with a new loan in the hopes of getting a lower APR to help you pay off your debt more quickly. This is an option for many loan types, including credit cards and student loans — but it’s particularly popular for mortgages since you can choose a cash-out refinance to tap into your home equity.

Meanwhile, debt consolidation involves combining different loans together so you have a single repayment schedule and rate. This can make it easier to keep track of your debt as well as potentially lower the APR. 

However, refinancing and consolidation are by no means a guarantee that you’ll get a lower rate, so make sure you get a quote from a lender and do a proper comparison with your current rate first. If the Federal Reserve has increased interest rates or your credit score has decreased since taking out your last loan, it may be more difficult to secure a more favorable rate. 

Sometimes, going to a credit union instead of a traditional bank can help you secure a lower rate. Credit unions are non-profit financial institutions with the mission of helping members find the best rates and terms for various financial products. Banks, in contrast, exist to make a profit and don't necessarily have the best interest of their customers in mind. 

Balance transfer

You may be able to reduce your credit card debt using a balance transfer card. As the name suggests, this involves transferring your debt from one card to another. Some credit cards have an introductory 0% interest rate, which can help you pay off your balance without paying interest, as long as you can repay the debt before the promotional period ends.

Repayment apps

You could also consider a credit card repayment app like Tally†. This is similar to a balance transfer card, but instead of paying zero interest for a limited period, you could receive a revolving line of credit and be able to pay a lower interest rate for as long as you need to clear the debt.

Tally's credit card debt payoff calculator can tell you how much you could save and how much more quickly you’d pay off your debt using Tally. Just enter in the details for your different cards, how much you can afford to pay each month and your credit score. 

Strategies to help you save

Are you struggling to save up funds to pay down your debt? You may want to consider using your tax refund or work bonus, if you get one, as payments toward debt. These lump-sum payments can reduce the total interest owed as long as they're paid toward the loan's principal. You may have to specify to your lender that a lump-sum payment should go toward the principal and not interest. 

You can also create a budget so you can see what your income and expenses are — there may be expenses that can be lowered or cut. You might also consider earning extra income through a part-time job, and the money you earn can be put toward loan payments. Once your loan is paid off, you can put the money you earn into your savings account instead.


Consistency is key

How long it takes to pay off a loan will differ for every borrower, mainly depending on the loan's APR, the size of the loan and how much you can afford to pay each month.

Focusing on strategies you can use to pay down your debt as quickly as possible will help you stay motivated as you work toward your financial goals. These may include:

  • Refinancing a current loan to get a lower interest rate or more favorable loan term

  • Consolidating multiple high-interest debts into one lower-interest loan

  • Taking advantage of a promotional rate balance transfer credit card 

  • Looking at your income expenses in detail 

All of the above are tried-and-true ways to manage your debt.  

One tool you might want to explore is the Tally credit card repayment app, which combines higher-interest credit card debt into a lower-interest line of credit.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.