1. What is the Remaining Balance Formula?

The remaining balance formula calculates how much you still owe on your car loan after making regular payments, accounting for interest and optional extra payments.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( RB \) — Remaining balance ($)
• \( PMT \) — Monthly payment amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Number of remaining payment periods

Explanation: The formula accounts for both principal and interest components of your remaining loan balance.

3. Importance of Calculating Remaining Balance

Details: Knowing your remaining balance helps with refinancing decisions, selling your vehicle, or planning early payoff strategies.

4. Using the Calculator

Tips: Enter your regular monthly payment, monthly interest rate (annual rate ÷ 12), remaining number of payments, and any extra payment you plan to make.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide your annual percentage rate by 12 (e.g., 6% APR = 0.06/12 = 0.005 monthly rate).

Q2: How do extra payments affect my loan?
A: Extra payments reduce principal faster, saving interest and potentially shortening your loan term.

Q3: Should I pay extra each month or make lump sums?
A: Regular extra payments have greater impact due to compounding, but any extra helps reduce interest costs.

Q4: Why does my remaining balance seem high?
A: Early in the loan, most payments go toward interest rather than principal.

Q5: Can I use this for other loans?
A: Yes, this formula works for any amortized loan with fixed payments (mortgages, personal loans, etc.).