Judging by my mail, for every borrower who worries about how they are going to make their next payment, there are 10 looking to make extra payments. Their personal strategies for doing this, however, vary widely. Here is a sampling, with the loan details omitted:

"I just took out a loan…If I add $100 a month to the payment beginning immediately, can you tell me when my loan will be paid off?"

"If I raise my payment from $763.24 to $800, how much sooner will I pay off?"

"…I figure that my bonus every December will allow me to pay $1,200 extra that month. If I do this every year, when will I be out of debt?"

"We're stretched right now, but in 2 years my wife will go back to work…and we will be able to add $400 a month to our mortgage payment. Can you tell me when this will pay off the loan in full?"

"We recently inherited $45,000 from my father. If we use it to reduce the balance on our loan, when will we get out of debt?"

"…I promised by daughter that if she took out a 15-year loan and made all the payments on time, I would pay the balance remaining after 10 years. Can you tell me how much that promise is going to cost me?"

With Charles Freedenberg of DecisionAide Analytics, I have designed four loan amortization and early payoff calculators that can answer these and similar questions related to prepaying loans.

Extra Monthly Payments (Calculator 2a) is for borrowers who want to know when their loan will pay off, and how much interest they will save, if they make extra voluntary payments in addition to their required monthly payment. This calculator can be used to answer all the italicized questions posed above, plus many more complicated variants such as multiple payment options of any type. For example, it will generate the amortization schedule if you make an extra payment of $100 every month starting in month 6, plus an extra payment of $1500 every year starting in month 18, plus a single payment of $12,000 in month 36.

Biweekly Payments Applied Monthly (Calculator 2b) is for borrowers who want to know when their loan will pay off, and how much interest they will save, if they shift to a biweekly payment plan on which payments are applied monthly. Most biweekly plans are of this type, including all those that use third parties. You can do this with calculator 2a, since a biweekly plan is the equivalent of one extra monthly payment every year beginning in the 12th month. The biweekly calculator just makes it a little easier. The user can make additional payments in the same way as with 2a.

Biweekly Payments Applied Biweekly (Calculator 2bi) is for borrowers who want to know when their loan will pay off, and how much interest they will save, if they shift to a biweekly payment plan on which payments are applied biweekly. The user can make extra voluntary payments in addition to the required biweekly payment. With this calculator, the extra payments are made at biweekly intervals rather than months, and the amortization schedule runs in terms of biweekly intervals.

Extra Monthly Payments to Pay Off in Specified Period (Calculator 2c) is for borrowers who want to know how much extra they must pay, above their required monthly payment, to pay off their loan within a specified period. It provides the same flexibility with regard to timing of payments and type of payments as calculator 2a. For example, suppose you have a balance of $100,000 on a 7% loan with 336 months to run, and you want to pay off in 180 more months. Here is a small sampling of some options that the calculator gives you:

    * Pay an extra $218 every month starting in month 1.
    * Pay an extra $271 every month starting in month 24.
    * Pay an extra $453 every other month starting in month 4.
    * Pay an extra $695 every quarter starting in month 9.
    * Pay an extra $1304 twice a year starting in month 3.
    * Pay an extra $2703 once a year starting in month 12.
    * Pay an extra $27,735 just once in month 24.