{
  "slug": "extra-principal-vs-invest",
  "title": "Extra Payment vs Invest Calculator",
  "heading": "Extra Loan Payment vs Invest Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/extra-principal-vs-invest",
  "summary": "For any loan — auto, student, personal — see if extra principal or the market wins.",
  "description": "This is the general-purpose version of the payoff-vs-invest question for any installment loan, not just a mortgage: student loans, auto loans, or personal loans. It compares the guaranteed return of eliminating interest at your loan's rate against putting the same extra dollars into an investment account at an expected market return, accounting for the fact that the loan path frees up cash sooner once paid off.",
  "formula": "Loan Path = interest avoided by extra principal, compounded over remaining term. Invest Path = FV of equal contributions at market return.",
  "dateModified": "2026-09-06",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=extra-principal-vs-invest",
  "inputs": [
    {
      "id": "loanBalance",
      "label": "Current loan balance",
      "kind": "number",
      "hint": null,
      "default": 18000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "loanRate",
      "label": "Loan interest rate",
      "kind": "number",
      "hint": null,
      "default": 7.5,
      "unit": "%",
      "min": 0,
      "max": 30
    },
    {
      "id": "extraMonthly",
      "label": "Extra monthly amount",
      "kind": "number",
      "hint": null,
      "default": 200,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "investReturn",
      "label": "Expected investment return",
      "kind": "number",
      "hint": null,
      "default": 8,
      "unit": "%",
      "min": 0,
      "max": 20
    },
    {
      "id": "years",
      "label": "Time horizon",
      "kind": "number",
      "hint": null,
      "default": 6,
      "unit": null,
      "min": 1,
      "max": 30
    }
  ],
  "outputs": [
    {
      "id": "winner",
      "label": "Higher-value path",
      "format": "raw",
      "hint": null,
      "primary": true
    },
    {
      "id": "investValue",
      "label": "Investing path value",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "loanValue",
      "label": "Extra payment path value",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "diff",
      "label": "Difference",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Current loan balance: 18000 $",
      "Loan interest rate: 7.5 %",
      "Extra monthly amount: 200 $",
      "Expected investment return: 8 %",
      "Time horizon: 6"
    ],
    "outputs": [
      "Higher-value path: Invest",
      "Investing path value: $18,405",
      "Extra payment path value: $14,940",
      "Difference: $3,465"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter current loan balance ($).",
      "Enter loan interest rate (%).",
      "Enter extra monthly amount ($).",
      "Enter expected investment return (%).",
      "Enter time horizon.",
      "Read your higher-value path on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "loanBalance": 11000,
        "loanRate": 4.5,
        "extraMonthly": 125,
        "investReturn": 4.8,
        "years": 4
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "loanBalance": 18000,
        "loanRate": 7.5,
        "extraMonthly": 200,
        "investReturn": 8,
        "years": 6
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "loanBalance": 29000,
        "loanRate": 12,
        "extraMonthly": 325,
        "investReturn": 12.8,
        "years": 10
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How is this different from the mortgage version?",
      "a": "Same math, applied to shorter, higher-rate debts like auto or student loans, where the guaranteed 'return' from extra payments is often higher than a mortgage rate, tipping the scale toward payoff more often."
    },
    {
      "q": "Should I pay off high-rate debt before investing at all?",
      "a": "Generally yes for anything above 8-10% interest — few reliable investments beat that after taxes and risk, which is why credit card and high-rate personal loan payoff nearly always wins this comparison."
    },
    {
      "q": "What if my employer matches 401k contributions?",
      "a": "Capture the full match first regardless of what this calculator says — it's an immediate guaranteed return that beats both paths here."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/mortgage-payoff-vs-invest",
    "https://www.revenuelab.fyi/toolbox/taxable-vs-tax-deferred-investing"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Extra Payment vs Invest Calculator (https://www.revenuelab.fyi/toolbox/extra-principal-vs-invest)"
}