# How to Calculate an Early Pay Off of a Personal Loan

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When you take out a personal loan, the bank loans you money for personal use. Unlike a specific loan, such as a car loan, you can use the money from a personal loan to pay for almost anything, including a vacation or consolidating your bills. In most cases, the sooner you pay off a personal loan, the less interest and finance charges you'll pay. To calculate the payoff of your personal loan, you need to know some basic math and the details of your loan.

Contact the bank or financial institution that gave you the personal loan. Ask the teller or representative for the remaining balance on your loan and the date of your last payment.

Look at your loan documents to determine your annual interest rate and whether your bank calculates interest on 360 or 365 days a year. If you don't have your loan documents, you'll have to get this information from your bank.

Divide your annual interest rate by either 360 or 365 to determine your daily interest rate. For example, if your annual interest rate is 9.2 percent and your bank calculates interest on 360 days, divide .092 by 360. Your daily interest rate is .0002556 or .02556 percent. Some calculators might show a result of something similar to "2.555555555555556e-4." The "e-4" means 10 to the power of -4. Just move the decimal four places to the left to get the correct decimal or six places to the left to get the correct percentage rate.

Determine the number of days between today and the date of your last payment. For example, if today is Dec. 4 and you made your last payment on Nov. 9, you made your payment 25 days ago.

Multiply your daily percent by the number of days since your last payment. Using the previous example, multiply .0002556 by 25 for a result of .0063889. Multiply this number by the balance of your loan. If you owe \$9,400, you'll owe an additional \$60.06 in interest that accrued since your last payment. Add this amount to your remaining balance to determine your early payoff amount.