1. What is an Auto Loan Amortization Calculator?

This calculator shows how each payment is split between principal and interest over the life of an auto loan. It also demonstrates the impact of making extra payments toward the principal.

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 amount
• \( extra \) — Additional principal payment

Explanation: Each payment first covers the interest due, then the remainder goes toward principal. Extra payments reduce the principal faster, saving interest and shortening the loan term.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest paid and shorten the loan term. This calculator shows exactly how much you can save.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, and term. Optionally add an extra monthly payment to see how it affects your amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce principal faster, saving interest and potentially paying off the loan early.

Q2: Should I specify extra payments are for principal?
A: Yes, always specify that extra payments should be applied to principal, not future payments.

Q3: Why does most of my early payment go to interest?
A: This is normal with amortizing loans. As principal decreases, more of each payment goes to principal.

Q4: How much can I save with extra payments?
A: Savings depend on loan amount, rate, and extra payment amount. Even $50/month can save thousands.

Q5: Are there prepayment penalties?
A: Most auto loans don't have prepayment penalties, but check your loan agreement to be sure.