Car Loan Extra Payment Calculator

Amortization Formula with Extra Payments:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

Loan Amount:

Interest Rate:

Loan Term:

years

Extra Monthly Payment:

Monthly Payment:

Total With Extra Payment:

Total Interest Saved:

Loan Term Reduction:

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1. What is a Car Loan Extra Payment Calculator?

This calculator shows how making extra payments on your car loan can save you money on interest and reduce your loan term. It generates a detailed amortization schedule with your extra payments included.

2. How Does the Calculator Work?

The calculator uses the amortization formulas:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

Where:

$ Interest_k $ — Interest portion of payment in month k
$ Principal_k $ — Principal portion of payment in month k
$ Balance_k $ — Remaining balance after month k
$ r $ — Monthly interest rate (annual rate / 12)
$ PMT $ — Regular monthly payment
$ extra $ — Additional payment amount

Explanation: Extra payments are applied directly to principal, reducing future interest calculations and accelerating payoff.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest paid and shorten loan term. This calculator helps visualize those savings.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term, and optional extra payment. Results show payment amounts, interest savings, and term reduction.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, interest rate, and extra payment amount. Even $20-50 extra per month can save hundreds in interest.

Q2: Should I pay extra each month or make lump sums?
A: Regular extra payments have the greatest impact, but any extra helps. Specify "one-time" vs "recurring" in your loan terms.

Q3: Will extra payments automatically reduce my term?
A: Some lenders apply extra to principal and keep the same term (lowering future payments), others shorten the term. Check with your lender.

Q4: Are there prepayment penalties?
A: Most car loans don't have prepayment penalties, but verify with your lender before making extra payments.

Q5: How do extra payments compare to refinancing?
A: Extra payments reduce interest by shortening the loan, while refinancing at a lower rate reduces interest directly. Both strategies can be combined.