1. What is a Car Loan Amortization Schedule?

A car loan amortization schedule shows how each payment is split between principal and interest over the life of the loan. In Canada, most car loans use fixed interest rates and monthly payments.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• \( Interest_k \) — Interest portion of payment k (CAD)
• \( Principal_k \) — Principal portion of payment k (CAD)
• \( Balance_k \) — Remaining balance after payment k (CAD)
• \( r \) — Periodic interest rate (decimal)
• \( PMT \) — Fixed payment amount (CAD)

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

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps you see the true cost of borrowing and make informed decisions about loan terms and prepayments.

4. Using the Calculator

Tips: Enter loan amount in CAD, annual interest rate (without % sign), loan term in years, and select payment frequency. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between bi-weekly and monthly payments?
A: Bi-weekly payments (every 2 weeks) result in 26 payments per year, equivalent to 13 monthly payments, which can pay off your loan faster.

Q2: Are Canadian car loans simple or compound interest?
A: Most Canadian car loans use compound interest, calculated on the outstanding balance.

Q3: How does a larger down payment affect the loan?
A: A larger down payment reduces the loan amount, resulting in lower payments and less total interest paid.

Q4: Can I make extra payments on my car loan?
A: Many Canadian lenders allow extra payments, but check your contract for prepayment penalties.

Q5: What is the typical car loan term in Canada?
A: Terms typically range from 3-7 years, with longer terms having lower payments but higher total interest costs.