1. What is an Auto Loan Amortization Calculator?

This calculator shows how extra payments affect your auto loan payoff schedule. It breaks down each payment into principal and interest components, showing how extra payments reduce both the loan term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the amortization formulas:

Where:

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

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce your loan term and total interest. For example, an extra $50/month on a $25,000 loan at 5% for 5 years can save over $800 in interest and pay off the loan 10 months early.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and term. Add any planned extra monthly payments to see how they affect your payoff schedule. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce principal faster, which decreases total interest and shortens the loan term.

Q2: Should I make extra payments or invest?
A: Compare your loan interest rate to potential investment returns. Paying off high-interest debt often 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: The more frequent the extra payments, the greater the savings. Even one annual extra payment helps.

Q5: Does the calculator account for irregular payments?
A: This calculator assumes consistent extra payments. For irregular payments, you'd need to recalculate each time.