1. What is Auto Loan Payoff Calculation?

The Auto Loan Payoff Calculator determines how quickly you can pay off your car loan by making extra payments. It shows the time and interest savings compared to making only the regular payments.

2. How Does the Calculator Work?

The calculator uses an iterative approach to determine when the balance reaches zero:

Where:

• \( P \) — Principal amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( PMT \) — Monthly payment (USD)
• extra payments — Additional payments (USD)
• \( n \) — Number of months until payoff

Explanation: The calculator simulates each month's payment, applying interest first, then principal reduction, until the balance reaches zero.

3. Importance of Extra Payments

Details: Extra payments directly reduce principal, saving interest and shortening loan term. Even small extra amounts can significantly reduce total cost.

4. Using the Calculator

Tips: Enter loan amount, interest rate, original term, and any extra payment you can make. Results show payoff time, interest savings, and time saved.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, rate, and extra payment amount. Even $50/month extra can save thousands in interest.

Q2: Should I pay extra principal or invest?
A: Compare loan interest rate with expected investment returns. Paying off high-interest debt usually comes first.

Q3: Are there prepayment penalties?
A: Most auto loans don't have prepayment penalties, but check your contract to be sure.

Q4: How often should I make extra payments?
A: More frequent payments (biweekly instead of monthly) can provide additional savings.

Q5: Does this work for refinanced loans?
A: Yes, the calculator works for any amortizing auto loan regardless of when it was originated.