How do I calculate how much interest I save by paying off a loan early?

The simple way: Request a payoff quote from your lender (the exact amount to close the loan today). Compare: Payoff quote vs. (remaining scheduled payments x monthly payment). The difference is the future interest you avoid by paying early.

Example: 36-month loan, $10,000 at 14% APR, monthly payment $342. Original total interest: $2,312. After 18 months, you request a payoff quote. Payoff amount: $5,000 (approximately). Remaining scheduled payments: 18 x $342 = $6,156. Interest saved by paying off at month 18: $6,156 - $5,000 = $1,156.

Why you cannot simply multiply remaining payments: The interest portion of each future payment declines as the balance falls. A simple multiplication overestimates future interest. The payoff balance is always less than remaining-payments total because the payoff includes no future interest - only today's principal balance plus accrued interest to date.

Effect of extra payments on interest: Each extra dollar paid toward principal reduces the balance on which future interest is calculated. On a $10,000 loan at 14% APR, an extra $100/month reduces total interest from $2,312 to about $1,200 and cuts the loan term from 36 months to about 27 months.

Check for prepayment penalties first: Some personal loans (particularly subprime loans and older bank products) charge a penalty of 1%-5% of the remaining balance for early payoff. A prepayment penalty can offset some or all of the interest savings. Read your loan agreement or ask your lender before making extra payments.