1. What is a Car Loan Repayment Schedule?

A car loan repayment schedule (amortization schedule) shows how each payment is split between principal and interest over the life of the loan. It helps borrowers understand how much they're paying in interest and how quickly they're building equity in their vehicle.

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 monthly payments
• \( PMT \) — Fixed monthly payment

Explanation: The formula calculates a fixed payment amount that pays off the loan with interest by the end of the term.

3. Importance of Loan Amortization

Details: Understanding your repayment schedule helps you see the true cost of borrowing, plan your finances, and consider whether making extra payments could save you money on interest.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate (typically 5-7% for car loans), and loan term in months (e.g., 60 for 5 years). The calculator will show your monthly payment and full repayment schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: Loans are front-loaded with interest because interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make larger payments, pay more frequently (biweekly instead of monthly), or choose a shorter loan term.

Q3: What's a typical car loan term?
A: Most car loans are 36-72 months (3-6 years), though some lenders offer terms up to 84 months.

Q4: How does a higher interest rate affect my payment?
A: Even a 1% higher rate can significantly increase your monthly payment and total interest paid over the loan term.

Q5: Should I put more money down?
A: A larger down payment reduces your principal, which lowers both your monthly payment and total interest.