1. What is the Auto Loan Extra Payment Calculator?

This calculator determines the remaining balance on an auto loan when making extra payments, helping borrowers understand how additional payments affect their loan payoff timeline and total interest paid.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( RB \) — Remaining balance ($)
• \( PMT \) — Monthly payment amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Number of remaining payment periods

Explanation: The formula calculates the present value of the remaining payments, showing how much principal is left to pay.

3. Importance of Calculating Remaining Balance

Details: Knowing your remaining balance helps in refinancing decisions, understanding the impact of extra payments, and planning your financial future.

4. Using the Calculator

Tips: Enter your regular monthly payment, monthly interest rate (annual rate divided by 12), and the number of payments remaining. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce your remaining balance faster, potentially saving you interest and shortening your loan term.

Q2: Should I pay extra toward principal or regular payments?
A: Paying extra toward principal is generally better as it reduces your balance faster, saving more interest.

Q3: How do I calculate my monthly interest rate?
A: Divide your annual interest rate by 12 (e.g., 6% annual = 0.06/12 = 0.005 monthly).

Q4: Does this calculator account for irregular extra payments?
A: No, this calculates the remaining balance based on consistent extra payments. For irregular payments, a more detailed amortization schedule is needed.

Q5: Will making extra payments always save me money?
A: Yes, but the amount saved depends on your interest rate and how early in the loan you make extra payments.