1. What is a Car Loan Amortization Schedule?

A car loan amortization schedule shows the breakdown of each payment into principal and interest over the life of the loan. It demonstrates how your balance decreases with each payment and how much interest you pay over time.

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

Explanation: Early payments consist mostly of interest, while later payments apply more toward the principal.

3. Importance of Amortization Schedule

Details: Understanding your amortization schedule helps you see the true cost of your loan, plan for early payoff, and understand how much equity you're building in your vehicle.

4. Using the Calculator

Tips: Enter the total loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and complete payment-by-payment breakdown.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: Interest is calculated on the current balance, which is highest at the beginning of the loan.

Q2: How can I pay less interest overall?
A: Make extra principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What happens if I make a larger payment?
A: Extra payments reduce your principal faster, which reduces future interest calculations.

Q4: Does the interest rate affect the schedule?
A: Higher rates mean more of each payment goes to interest, slowing principal reduction.

Q5: Why does my last payment sometimes differ?
A: Due to rounding, the final payment may be slightly adjusted to clear the balance exactly.