1. What is a Car Loan Amortization?

Car loan amortization is the process of paying off a car loan with regular payments over time. Each payment covers both interest and principal, with the interest portion decreasing and the principal portion increasing over the life of the loan.

2. How Does the Calculator Work?

The calculator uses these amortization formulas:

Where:

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

3. Understanding the Amortization Schedule

Details: Early in the loan, most of each payment goes toward interest. As the loan matures, more of each payment is applied to the principal. This calculator shows the breakdown for each payment.

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 detailed amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: This is how amortization works - interest is calculated on the outstanding balance, which is highest at the beginning of the loan.

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's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing, while APR includes fees and other loan costs. This calculator uses the interest rate.

Q4: Should I choose a longer loan term for lower payments?
A: While longer terms reduce monthly payments, you'll pay more interest overall. Choose the shortest term you can comfortably afford.

Q5: Can I see the full amortization schedule?
A: This calculator shows the first 12 months. For a full schedule, export the results or use spreadsheet software.