1. What is a Car Loan Amortization?

A car loan amortization schedule shows how each payment is split between principal and interest over the life of the loan. With extra payments, you can see how much faster you can pay off the loan and how much interest you can save.

2. How Does the Calculator Work?

The calculator uses these equations:

Where:

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

Explanation: Each payment first covers the interest due, then the remainder goes toward principal. Extra payments reduce the principal faster, saving interest.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest and shorten the loan term. This calculator shows exactly how much you can save.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term in years, and optional extra payment. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Even $50-100 extra per month can save thousands in interest and cut years off your loan term.

Q2: Should I pay extra each month or make lump sum payments?
A: Regular extra payments have a bigger impact than occasional lump sums due to compounding.

Q3: Are there prepayment penalties?
A: Most auto loans don't have prepayment penalties, but check your contract to be sure.

Q4: How does this compare to refinancing?
A: Extra payments reduce principal while refinancing changes loan terms. Both can save money.

Q5: Should I pay extra or invest the money?
A: If your loan rate is higher than expected investment returns, paying extra usually makes sense.