1. What is a Car Loan Amortization Table?

A car loan amortization table shows the breakdown of each payment into principal and interest over the life of the loan. It helps borrowers understand how much of each payment goes toward reducing the loan balance versus paying interest.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( Interest_k \) — Interest portion of payment in period k
• \( Principal_k \) — Principal portion of payment in period k
• \( Balance_k \) — Remaining balance after payment k
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( PMT \) — Fixed monthly payment amount

3. Importance of Amortization Tables

Details: Amortization tables help borrowers understand the true cost of their loan, plan for early payoff, and see how much interest they'll pay over the life of the loan.

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 a complete payment-by-payment breakdown.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: This is how amortization works - early payments have more interest because the balance is higher. As the balance decreases, more of each payment goes to principal.

Q2: How can I pay less interest overall?
A: You can make extra principal payments, choose a shorter loan term, or negotiate a lower interest rate.

Q3: What happens if I make an extra payment?
A: Extra payments directly reduce the principal, which reduces future interest and may shorten the loan term.

Q4: Are there prepayment penalties?
A: Some loans have prepayment penalties - check your loan agreement before making extra payments.

Q5: How accurate is this calculator?
A: This provides a standard amortization schedule. Your actual payments may vary slightly due to rounding or specific lender policies.