Bankrate Auto Loan Calculator Extra Payment On Principal

Amortization Formula with Extra Payments:

\[ \text{Interest}_k = \text{Balance}_{k-1} \times r \] \[ \text{Principal}_k = \text{PMT} + \text{extra} - \text{Interest}_k \] \[ \text{Balance}_k = \text{Balance}_{k-1} - \text{Principal}_k \]

Loan Amount:

Interest Rate:

Loan Term:

years

Extra Monthly Payment:

Total Interest Paid:

Total Payments:

Loan Payoff Time:

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1. What is the Auto Loan Calculator with Extra Payments?

This calculator shows how making extra payments toward your auto loan principal can reduce your total interest paid and shorten your loan term. It generates an amortization schedule that accounts for additional principal payments.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas with modifications for extra payments:

\[ \text{Interest}_k = \text{Balance}_{k-1} \times r \] \[ \text{Principal}_k = \text{PMT} + \text{extra} - \text{Interest}_k \] \[ \text{Balance}_k = \text{Balance}_{k-1} - \text{Principal}_k \]

Where:

$ \text{Interest}_k $ — Interest portion of payment for period k
$ \text{Balance}_{k-1} $ — Remaining balance from previous period
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ \text{PMT} $ — Regular monthly payment amount
$ \text{extra} $ — Additional principal payment
$ \text{Principal}_k $ — Principal portion of payment for period k

3. Benefits of Extra Payments

Details: Making extra payments toward principal can significantly reduce total interest costs and shorten the loan term. Even small additional payments can have a large impact over time.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and any additional monthly principal payment you plan to make. The calculator will show your amortization schedule and total savings.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, interest rate, and extra payment amount. Even $50/month extra can save thousands and shorten your loan by years.

Q2: Should I specify extra payments go to principal?
A: Yes, always specify that extra payments should be applied to principal, not future payments. This ensures maximum interest savings.

Q3: When is the best time to make extra payments?
A: Earlier in the loan term has the greatest impact, as more of your payment goes toward interest at the beginning.

Q4: Are there prepayment penalties?
A: Most auto loans don't have prepayment penalties, but check your loan agreement to be sure.

Q5: How do extra payments compare to refinancing?
A: Extra payments reduce interest costs without refinancing fees. If rates have dropped significantly, refinancing plus extra payments may be optimal.