1. What is the Auto Loan Extra Payment Calculator?

This calculator shows how making extra payments on your auto loan can reduce your total interest paid and shorten your loan term. It uses standard amortization formulas adjusted for extra payments.

2. How Does the Calculator Work?

The calculator uses these 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)
• \( PMT \) — Regular monthly payment amount
• \( extra \) — Additional principal payment

Explanation: Extra payments are applied directly to principal, reducing future interest calculations and accelerating payoff.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest and shorten loan term. The earlier extra payments are made, the greater their impact.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term in years, and any planned extra payment. Results show new payoff timeline and interest savings.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan size, rate, and extra payment amount. Even $20-50 extra per month can save hundreds in interest.

Q2: When is the best time to make extra payments?
A: Earlier payments have greater impact as they reduce principal before more interest accrues.

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

Q4: Should I pay extra or invest instead?
A: Compare loan interest rate to expected investment returns. Paying off high-interest debt often provides better guaranteed returns.

Q5: How do I make sure extra payments go to principal?
A: Specify with lender that extra payments should be applied to principal, not future payments.