1. What is an Auto Loan Amortization Calculator?

This calculator shows how making extra principal payments affects your auto loan. It calculates your monthly payment, total interest paid, and how much you can save by paying extra each month.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

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

Explanation: Extra payments reduce the principal faster, which reduces the total interest paid and shortens the loan term.

3. Importance of Extra Principal Payments

Details: Making extra principal payments can save thousands in interest and pay off your loan years earlier. Even small additional amounts make a significant difference over time.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and term. Add any extra monthly principal payment you plan to make. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on your loan terms and extra payment amount. Even $50/month extra can save thousands and shorten your loan by years.

Q2: Should I pay extra principal or invest?
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 often should I make extra payments?
A: Regular extra payments (monthly) have the greatest impact, but even occasional lump sums help.

Q5: Does this work for refinanced loans?
A: Yes, the same principles apply to any amortizing loan (mortgage, auto, personal).