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Car Loan Amortization Calculator Extra Payments

Loan Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

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1. What is the Car Loan Amortization Calculator?

This calculator computes your monthly car loan payment and creates an amortization schedule that shows how extra payments reduce your loan term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

Extra Payments: Any additional payment is applied directly to the principal, reducing the balance faster and saving interest.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce your loan term and total interest. For example, adding $50/month to a $25,000 loan at 5% for 60 months can save over $600 in interest and pay off the loan 6 months early.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, and term. Add any planned extra monthly payment to see its impact. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce the principal faster, which decreases total interest and shortens the loan term.

Q2: Should I pay extra each month or make lump sum payments?
A: Regular extra payments have more impact, but any extra payment helps. The earlier you make extra payments, the more you save.

Q3: Will my monthly payment change if I make extra payments?
A: No, your regular payment stays the same, but more goes toward principal as the balance decreases.

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

Q5: How much can I save with extra payments?
A: Savings depend on loan amount, interest rate, and how much extra you pay. This calculator shows exact savings for your situation.

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