Car Amortization Table Formula and Example

A car amortization table shows how each scheduled loan payment is divided between interest and principal, and how the balance falls over time. Enter the amount financed, APR, and term below to calculate the level monthly payment and total interest; the table formula can then be used to calculate each month’s interest, principal paid, and remaining balance.

Formula

For a fixed-rate loan with equal monthly payments, the payment formula is M = P × r / [1 − (1 + r)⁻ⁿ]. Here, M is the monthly payment in dollars, P is the amount financed in dollars, r is the monthly interest rate as a decimal, and n is the number of monthly payments. Convert APR to a monthly decimal with r = APR / 1200 when APR is entered as a percentage, and convert years to months with n = 12 × years.

After finding the payment, calculate each table row in sequence. For month t, let B_t−1 be the balance before payment, starting with B₀ = P:

• Interest_t = B_t−1 × r.
• Principal_t = M − Interest_t.
• B_t = B_t−1 − Principal_t.

The calculator’s total-interest output is the scheduled payment multiplied by the number of months, minus the amount financed. Because the displayed monthly payment is rounded to cents, this total uses that rounded payment, as many payment schedules do. Exact lender figures may differ because of payment dates, rounding conventions, and contract terms.

Worked Example

Using the calculator’s defaults, the amount financed is $20,000, APR is 8%, and term is 5 years. First convert the term to n = 5 × 12 = 60 months. The monthly rate is r = 8 / 1200 = 0.0066667.

1. Substitute into the payment formula: M = 20,000 × 0.0066667 / [1 − (1.0066667)⁻⁶⁰].
2. The monthly payment rounds to $405.53.
3. Total scheduled payments using the rounded payment are $405.53 × 60 = $24,331.80.
4. Total interest is $24,331.80 − $20,000 = $4,331.80.

For the first table row, interest is $20,000 × 0.0066667 = $133.33 when rounded to cents. Principal paid is $405.53 − $133.33 = $272.20, leaving a balance of $19,727.80. In the next month, calculate interest on that new balance, not on the original $20,000.

Assumptions

• The interest rate stays fixed for the full modeled term.
• Payments are equal monthly payments made at the end of each monthly period.
• Interest accrues monthly using APR divided by 12; the APR input is a percentage per year.
• The calculation excludes fees, taxes, insurance, optional products, and any other amounts not entered. It does not model changing payment dates or lender-specific rounding.

How to Read a Car Amortization Table

A typical table has one row per payment and columns for the payment number, beginning balance, payment amount, interest, principal, and ending balance. Early in a level-payment loan, the balance is larger, so the interest portion is larger. As principal is repaid, the balance shrinks; consequently, more of a fixed payment goes to principal and less to interest. The payment itself does not automatically decline.

To build the table, carry the previous row’s ending balance into the next row as its beginning balance. Use full precision in calculations where possible and round the displayed dollar figures to cents. If you round every intermediate value aggressively, small differences can accumulate. The final payment may need a small adjustment to clear the remaining balance, depending on the lender’s daily interest and rounding methods.

What the Calculator Includes—and Leaves Out

The calculator estimates a standard installment-loan payment from principal, APR, and term. For a vehicle purchase, “amount financed” is not necessarily the advertised vehicle price: it may reflect a down payment or trade-in and may include items rolled into the loan. Enter the principal that applies to the loan calculation, not automatically the sticker price.

The estimate does not include costs that are billed separately or financed in a way the inputs do not represent. It also assumes a fixed APR and a regular monthly schedule. A contract with variable interest, irregular first-payment timing, a balloon payment, deferred interest, or extra payments needs a more specific model.

Common Mistakes and Related Questions

• Using APR as the monthly rate: At 8% APR, use 0.08 / 12, or 8 / 1200—not 8 as a decimal monthly rate.
• Confusing term and payment count: A five-year monthly loan has 60 scheduled payments, not five.
• Assuming the whole payment reduces principal: Interest is paid first in the standard row calculation; the remainder reduces principal.
• Treating the result as a payoff quote: A payoff amount can depend on the date and accrued interest, so the schedule’s balance is not necessarily the amount required to close the loan on a particular day.

Frequently Asked Questions

What is the car amortization table formula?
Calculate monthly payment using M = P × r / [1 − (1 + r)⁻ⁿ]. For each month, interest is the prior balance times r, principal is payment minus interest, and the new balance is prior balance minus principal.

How do I calculate the interest portion of a car payment?
Multiply the balance immediately before that payment by the monthly interest rate. For example, a $20,000 balance at 8% APR has about $133.33 of interest for a full month under the monthly-rate assumption.

Why does the principal portion increase over time?
With a fixed payment and fixed rate, the balance declines after principal is repaid. Since monthly interest is calculated on that balance, the interest portion generally falls and the principal portion rises.

Does an amortization table include a down payment?
It uses the amount financed as principal. A down payment affects the schedule only insofar as it reduces the principal entered; the table does not separately calculate the purchase price or down payment.

Why might my lender’s table differ?
Differences can result from payment dates, daily rather than simplified monthly accrual, fees, financed add-ons, rounding, or a first period that is not exactly one month. Check the loan disclosure or ask the lender for its payment schedule.

This result is an estimate for educational purposes, and the lender’s disclosure gives the exact figures.

Related

• Free Amortization Table Calculator: Payments and Balance
• Biweekly Amortization Table: Payments and Payoff
• Amortization Table Calculator: Payments and Balance

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2