1. What is an Auto Loan Amortization Table?

An auto loan amortization table shows how each payment is split between principal and interest over the life of the loan. It helps borrowers understand how much they're paying in interest and how quickly they're building equity in their vehicle.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

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

Explanation: Early payments are mostly interest, while later payments are mostly principal as the balance decreases.

3. Importance of Amortization

Details: Understanding amortization helps borrowers make informed decisions about loan terms, extra payments, and refinancing options.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show the monthly payment and full amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go to interest?
A: This is how amortization works - interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or negotiate a lower interest rate.

Q3: What's the difference between APR and interest rate?
A: APR includes fees and other loan costs, while the interest rate is just the cost of borrowing the principal.

Q4: Are there prepayment penalties?
A: Some loans have penalties for early payoff - check your loan agreement.

Q5: How does a larger down payment affect the loan?
A: A larger down payment reduces the loan amount, resulting in lower monthly payments and less total interest.