1. What is a Car Loan Amortization Calculator?

This calculator shows how making extra principal payments affects your car loan payoff timeline and total interest paid. It generates a detailed amortization schedule showing the breakdown of each payment between principal and interest.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of months in loan term
• \( PMT \) — Monthly payment amount

Explanation: Extra principal payments are applied directly to the loan balance, reducing both the remaining term and total interest paid.

3. Importance of Extra Principal Payments

Details: Making additional principal payments can significantly reduce the total interest paid and shorten the loan term. Even small extra payments can have a substantial impact over time.

4. Using the Calculator

Tips: Enter the loan amount, interest rate (typically 5-7% for car loans), loan term in years, and any additional principal payment you plan to make each month. The calculator will show your amortization schedule and total savings.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, rate, and extra payment amount. A $20,000 loan at 6% for 5 years saves $1,300+ with $100 extra monthly.

Q2: When should I make extra payments?
A: Earlier payments have greater impact as more goes toward interest early in the loan. Start extra payments as soon as possible.

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

Q4: Should I refinance instead?
A: If rates have dropped significantly, refinancing might be better than extra payments. Compare both options.

Q5: How does this compare to lease vs. buy?
A: This calculator is for purchases. Leasing has different financial considerations and no equity buildup.