1. What is an Auto Loan Amortization?

An auto loan amortization schedule shows how each payment is split between principal and interest over the life of the loan. Early payments are mostly interest, while later payments apply more to principal.

2. How Does the Calculator Work?

The calculator uses these 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)
• \( PMT \) — Fixed monthly payment amount

3. Understanding the Amortization Schedule

Details: The schedule shows how your payments are applied over time. Initially, most of your payment goes toward interest, but as the principal decreases, more goes toward paying down the loan.

4. Using the Calculator

Tips: Enter the total loan amount, annual interest rate (APR), and loan term in years. The calculator will show your monthly payment and a detailed amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go to interest?
A: This is how amortizing loans work - interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make extra principal payments when possible, which will reduce the total interest paid over the life of the loan.

Q3: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any loan fees, giving a more complete picture of the loan cost.

Q4: Does a longer loan term save money?
A: No, longer terms mean lower monthly payments but more total interest paid over the life of the loan.

Q5: Can I change my payment frequency?
A: Some lenders allow biweekly payments (26 payments/year), which can help pay off the loan faster.