Auto Loan Amortization Calculator With Extra Payments

Amortization Formula with Extra Payments:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

Loan Amount:

Annual Interest Rate:

Loan Term:

months

Extra Monthly Payment:

Total Interest Paid:

Total Payments:

Loan Payoff Time:

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1. What is an Auto Loan Amortization Calculator?

This calculator shows how each payment is split between principal and interest over the life of an auto loan, including the impact of any extra payments you make. It helps you understand how much interest you'll pay and how extra payments can reduce your loan term.

2. How Does the Calculator Work?

The calculator uses the amortization formula with extra payments:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

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 $ — Regular monthly payment amount
$ extra $ — Additional payment amount

Explanation: Each payment first covers the interest due, then the remainder goes toward principal. Extra payments reduce principal faster, saving interest and shortening the loan term.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest and shorten your loan term. For example, an extra $50/month on a $25,000 loan at 5% for 60 months saves $634 in interest and pays off 7 months early.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term in months, and any planned extra payment. The calculator shows your amortization schedule and total interest savings from extra payments.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce principal faster, which decreases total interest paid and may shorten your loan term.

Q2: Should I specify extra payments go toward principal?
A: Yes, always request that extra payments be applied to principal only, not future payments.

Q3: Is it better to make biweekly payments?
A: Making half-payments every two weeks (26 payments/year) equals one extra monthly payment annually, reducing your term.

Q4: Will prepayment penalties apply?
A: Most auto loans don't have prepayment penalties, but check your loan agreement to be sure.

Q5: How much can I save with extra payments?
A: Savings depend on loan amount, rate, term, and extra payment amount. This calculator shows exact savings for your scenario.