1. What is an Auto Loan Calculator?

This calculator helps you understand how extra payments affect your 84-month auto loan. It shows how making additional principal payments can reduce your loan term and total interest paid.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• \( Interest_k \) — Interest portion of payment in month k
• \( Principal_k \) — Principal portion of payment in month k
• \( Balance_k \) — Remaining balance after month k
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( PMT \) — Regular monthly payment
• \( extra \) — Additional principal payment

3. Importance of Extra Payments

Details: Extra payments directly reduce principal, which decreases total interest paid and can significantly shorten the loan term. Even small extra payments can have a big impact over time.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and any additional monthly payment you plan to make. The calculator will show your amortization schedule and total savings.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, interest rate, and extra payment amount. Even $50/month can save thousands over an 84-month term.

Q2: Should I make extra payments or invest instead?
A: Compare your loan interest rate to potential investment returns. Paying off high-interest debt usually provides better guaranteed returns.

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

Q4: How do I make sure extra payments go to principal?
A: Contact your lender to confirm their process - some require special instructions for extra principal payments.

Q5: Is an 84-month loan a good idea?
A: While lower monthly payments are attractive, longer terms mean more interest paid. Consider the shortest term you can afford.