Our Methodology

Every calculator on PayoffRoute is built on standard, published financial mathematics — the same formulas lenders and finance textbooks use. This page documents exactly how we compute results, what our models assume, and how we verify them, so you never have to take our numbers on faith. Last reviewed: July 8, 2026.

The core formula: loan amortization

Fixed-payment loans (home equity loans, personal loans, mortgages, and HELOC repayment phases) use the standard amortization payment formula:

M = P × r ÷ (1 − (1 + r)⁻ⁿ)

• M — the fixed monthly payment
• P — the principal (amount borrowed)
• r — the monthly interest rate: annual rate ÷ 12 (so 8.5% APR → 0.085 ÷ 12)
• n — the number of monthly payments (years × 12)

When the rate is 0%, the formula reduces to simple division: M = P ÷ n. Total interest is always M × n − P. This is the same equation documented in any finance reference — see, for example, the CFPB's consumer loan resources or any standard text on the time value of money.

Month-by-month simulation

Scenarios that a closed formula can't capture — extra payments, multiple credit cards, promotional rate windows, payoff-strategy comparisons — are computed by direct simulation. Each simulated month:

1. Interest accrues on the outstanding balance: balance × (annual rate ÷ 12)
2. The month's payment is applied (never more than the remaining balance)
3. The balance carries into the next month

The loop runs until the balance reaches zero or 1,200 months (100 years) pass — at which point we tell you plainly that the plan never pays off, rather than showing a misleading number. Multi-debt tools (credit card payoff, debt consolidation) simulate every debt in parallel: minimum payments go to each open account first, and the remaining budget goes to the target account chosen by your strategy. When an account closes, its freed-up payment automatically rolls into the attack budget.

How fees are counted

We count fees as part of the true cost of borrowing, not as a footnote. Origination fees and balance-transfer fees are added to the financed principal (or deducted from your disbursement, where that's how the product works), and every "total cost" figure we show includes them. The personal loan calculator goes further and reports an effective APR — the rate that equates what you actually received with what you actually repay — found by bisection search, because a fee deducted up front makes the true cost higher than the advertised rate.

What our models assume

• Constant rates unless stated. Fixed-rate products keep one rate for the term. For variable products (HELOCs, post-promo card rates) we model the rate pattern you enter and say so on the page — we cannot predict future rate moves.
• Monthly compounding. We use annual rate ÷ 12 per month, the convention for US consumer installment loans. Credit card issuers often accrue daily; over a payoff horizon the difference is small (typically under 1% of total interest), and it slightly understates card interest — meaning real savings from paying cards off are marginally larger than we show.
• Principal and interest only. Mortgage figures exclude property tax, insurance, and escrow — those aren't debt and don't amortize. Each page tells you to enter the P&I portion only.
• On-time payments. Late fees and penalty APRs aren't modeled.
• Estimates, not offers. Real lenders quote based on your credit profile, and their rounding conventions may differ from ours by a few cents.

How we verify

Every calculator is tested before release by recomputing its outputs independently — the amortization results against the closed-form formula, the simulations against hand-worked scenarios — and by automated browser tests that exercise edge cases: 0% rates, payments that don't cover interest, balances of zero, and fee extremes. When a calculator's inputs allow a situation its model can't answer honestly, it says so instead of guessing.

Found an error?

If any number on this site looks wrong, we want to know — tell us and include the inputs you used. Verified corrections ship quickly, and this page's review date is updated whenever formulas or content change.