1. What is Early Car Loan Repayment?

This calculator determines how much faster you can pay off your car loan by making additional principal payments each month. It shows both the reduced loan term and the total interest savings.

2. How Does the Calculator Work?

The calculator uses an iterative approach:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Original loan term (months)
• \( extra \) — Additional monthly payment (USD)

Explanation: The calculator recalculates the loan balance month-by-month with the extra payment until the balance reaches zero.

3. Benefits of Extra Payments

Details: Even small extra payments can significantly reduce your loan term and total interest paid, often saving thousands of dollars.

4. Using the Calculator

Tips: Enter your loan details and the amount you can add to each payment. The calculator will show your new payoff date and total savings.

5. Frequently Asked Questions (FAQ)

Q1: How much should I pay extra each month?
A: Even $20-50 extra per month can make a significant difference. Pay what you can comfortably afford.

Q2: Does it matter when I make extra payments?
A: Earlier extra payments save more interest since they reduce principal faster. But any extra helps.

Q3: Will my lender apply extra to principal?
A: Most do, but confirm with your lender. Specify "for principal only" when making payments.

Q4: Are there prepayment penalties?
A: Most auto loans don't have them, but check your contract to be sure.

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