1. What is Auto Loan Amortization?

Auto loan amortization is the process of paying off your car loan with regular payments over time. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the life of the loan.

2. How Does the Calculator Work?

The calculator uses the 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

3. Understanding Your Amortization Schedule

Details: Early in your loan, most of your payment goes toward interest. As you pay down the principal, more of each payment goes toward reducing your balance.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and term in months. The calculator will show your monthly payment and generate a complete amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go to interest?
A: Interest is calculated on the outstanding balance, which is highest at the beginning of the loan.

Q2: How can I pay less interest overall?
A: Make extra principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What's the difference between simple and precomputed interest?
A: Most auto loans use simple interest, where interest accrues daily on the current balance.

Q4: Does a longer loan term mean I pay more interest?
A: Yes, stretching payments over more months means more interest payments overall, even if the rate is the same.

Q5: How accurate is this calculator?
A: This provides standard amortization calculations similar to Bankrate's tool, but check with your lender for exact figures.