1. What is an Auto Loan Amortization Schedule?

An auto loan amortization schedule shows the breakdown of each payment into interest and principal components, and how the loan balance decreases over time. This helps borrowers understand how much of their payment goes toward the loan principal versus interest.

2. How Does the Calculator Work?

The calculator uses the standard amortization formulas:

Where:

• \( Interest_k \) — Interest portion of payment k
• \( Principal_k \) — Principal portion of payment k
• \( Balance_k \) — Remaining balance after payment k
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( PMT \) — Fixed monthly payment amount

Explanation: Early payments consist mostly of interest, while later payments apply more toward the principal.

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps you see the true cost of borrowing and can inform decisions about making extra payments or refinancing.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (typical Ontario rates range from 3-8%), and loan term in years (typically 3-7 years for auto loans).

5. Frequently Asked Questions (FAQ)

Q1: What is the average auto loan interest rate in Ontario?
A: As of 2023, rates typically range from 3-8% for new cars and 5-10% for used cars, depending on credit score.

Q2: Are there prepayment penalties in Ontario?
A: Most lenders allow some prepayment, but check your contract as some may charge fees for early payoff.

Q3: How does a larger down payment affect the loan?
A: Larger down payments reduce the loan amount, resulting in lower monthly payments and less total interest paid.

Q4: What additional costs should I consider in Ontario?
A: Remember to factor in 13% HST, licensing fees, and potential dealer documentation fees.

Q5: Can I negotiate the interest rate?
A: Yes, especially if you have good credit. Dealerships often have some flexibility on rates.