1. What is the Auto Loan Calculator?

The Bankrate Auto Loan Calculator with Extra Payments helps you understand how making additional payments affects your loan payoff timeline and total interest paid. It generates a detailed amortization schedule showing the impact of extra payments.

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 payment amount

3. Importance of Extra Payments

Details: Extra payments directly reduce principal, which decreases total interest paid and can significantly shorten the loan term. Even small additional amounts can have a large impact over time.

4. Using the Calculator

Tips: Enter loan amount, interest rate, and term. Optionally add an extra monthly payment to see how it affects your payoff schedule. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments save money?
A: Extra payments reduce principal faster, which means less interest accrues over the life of the loan.

Q2: Should I pay extra principal or save money?
A: Compare your loan interest rate to potential investment returns. Paying off higher-interest debt usually makes financial sense.

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

Q4: How much can extra payments save?
A: Even $50 extra per month on a $25,000 loan at 5% for 60 months saves $411 in interest and pays off 4 months early.

Q5: When is the best time to make extra payments?
A: Earlier payments have the most impact, but any time helps. Specify "for principal only" with your payment.