Multi-Loan Prepayment Optimizer
Enter all your loans, tell us your extra cash, and we will show you the optimal prepayment strategy — plus whether your HYSA beats paying down debt. Read the guide →
For educational purposes only. Calculator results are estimates based on the inputs you provide and are not a substitute for professional financial advice. Consult a licensed financial advisor before making investment, borrowing, or retirement decisions.
Five objectives, one calculator
When you have extra cash and multiple loans, the right target depends on your goal — not just the math. Different objectives point to different loans.
Lowest Interest
Target the highest-rate loan first (Avalanche). Minimises total interest paid across all loans — the mathematically optimal strategy.
Debt-Free Fastest
Target whichever loan reduces your overall debt-free date the most. Sometimes differs from the pure rate order depending on your balance mix.
Quick Win
Target the smallest balance first (Snowball). Eliminates individual debts quickly for the psychological momentum of seeing accounts close.
Free Cash Flow
Target the loan with the highest monthly payment. Eliminating it frees the most cash per month — valuable if your monthly budget is tight.
Save in HYSA
Skip prepaying entirely. Invest your extra cash in a high-yield savings account instead and see what it earns over the same period.
Mortgage duration — why it matters
For long loans — mortgages especially — extra payments don't just save interest, they cut years off your term. A $500/month extra payment on a $300,000 mortgage at 6.5% can eliminate 8+ years. The calculator highlights this duration reduction prominently for any loan over 5 years, so the time impact is immediately visible alongside the dollar savings.
How to use this calculator
- Add your loans — Enter each loan with its name, current balance, annual interest rate, and monthly payment.
- Set your extra payment — Enter how much extra you have available and whether it is monthly, quarterly, or a one-time lump sum.
- Enter your HYSA rate — The current APY on your savings account. This lets the calculator compare prepaying vs saving.
- Select an objective — After calculating, pick your goal from the five tabs and see the recommended target loan and per-loan impact.
Frequently asked questions
When should I save in a HYSA instead of prepaying?
If your HYSA rate is higher than your loan's interest rate, saving beats prepaying mathematically. For example, if your mortgage is at 3.5% and your HYSA earns 5.2%, every dollar in the HYSA earns 1.7% more than it saves by prepaying. This situation was common in 2023–2024 when savings rates rose above many older mortgage rates.
What if two loans have the same interest rate?
The Avalanche method will select the one with the higher outstanding balance (maximising the interest reduction). The Snowball method will select the smaller balance. If rates and balances are identical, the mathematical difference between strategies is negligible.
Can I use this for student loans, car loans, and mortgages together?
Yes. The calculator is loan-agnostic — enter any loan type. Keep in mind that student loan interest may be tax-deductible (reducing the effective rate), and some loans have prepayment penalties. Factor these in when evaluating the actual benefit of prepaying specific loans.
Should I build an emergency fund before prepaying loans?
Yes. Most financial advisors recommend a fully-funded emergency fund (3–6 months of expenses in a HYSA) before making extra debt payments. Without a cushion, any unexpected expense could force you to take on new high-interest debt, erasing your prepayment progress. Security first, then optimisation.
Multi-loan prepayment in real scenarios
$25,000 car loan at 7% and $200,000 mortgage at 4% — which to prepay?
Mathematically, prepay the 7% car loan first — every extra dollar saves 7 cents annually vs 4 cents on the mortgage. With $500/month extra, applying it to the car loan pays it off years earlier and frees that payment to redirect to the mortgage. The exception: if your HYSA earns above 7%, keeping the cash beats prepaying the car loan.
Avalanche vs snowball on three loans: $8,000 at 22%, $15,000 at 8%, $40,000 at 5%
Avalanche targets the 22% balance first — minimising total interest paid. Snowball targets the $8,000 balance first for the psychological win of eliminating a debt quickly. On these typical rates, the avalanche method saves hundreds to thousands more. But snowball's motivational effect means many people actually stay the course and pay off more debt overall.
When your HYSA rate beats your mortgage rate
With an older 3.25% mortgage and a HYSA earning 4.8% today, every extra dollar in savings earns 1.55% more than prepaying the mortgage. On $50,000 in extra cash, that difference is $775 per year — in favour of saving, not prepaying. This arbitrage erodes as rates change, so revisit the comparison annually.
What happens when you eliminate a loan entirely
Paying off the smallest or highest-rate loan completely frees its minimum payment for redirection. If your $8,000 personal loan requires $200/month, eliminating it lets you apply that $200 to the next priority. This debt-stacking approach accelerates payoff on a fixed budget: each eliminated loan makes the next one faster to clear.