1. What is an Auto Loan Extra Payment Calculator?

This calculator shows how making extra payments on your auto loan can reduce both the total interest paid and the loan term. It generates a detailed amortization schedule accounting for your additional payments.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( Interest_k \) — Interest portion of payment k
• \( Balance_{k-1} \) — Remaining balance after payment k-1
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( Principal_k \) — Principal portion of payment k
• \( PMT \) — Regular monthly payment
• \( extra \) — Additional payment amount

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. For example, $50 extra per month on a $25,000 loan at 5% can save thousands in interest.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term, and any planned extra payment. Results show interest savings and new payoff date. You can try different extra payment amounts to see their impact.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce principal faster, decreasing total interest and shortening loan term.

Q2: Should I pay extra each month or make lump sum payments?
A: Regular extra payments have greater impact, but any extra helps. The sooner you pay extra, the more you save.

Q3: Are there prepayment penalties on auto loans?
A: Most auto loans don't have prepayment penalties, but check your loan agreement.

Q4: How much can I save with extra payments?
A: Savings depend on loan amount, rate, term, and extra payment amount. This calculator shows exact savings.

Q5: Should I pay extra or invest the money?
A: Compare loan interest rate to potential investment returns. Paying off high-interest debt usually provides better guaranteed returns.