1. What is a Car Loan Amortization Schedule?

A car loan amortization schedule shows the breakdown of each monthly payment into principal and interest components, along with the remaining loan balance after each payment.

2. How Does the Calculator Work?

The calculator uses these formulas:

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

Explanation: Early payments consist mostly of interest, while later payments apply more toward principal.

3. Importance of Amortization Calculation

Details: Understanding amortization helps borrowers see the true cost of their loan, plan for early payoff, and understand how much equity they're building each month.

4. Using the Calculator

Tips: Enter the total loan amount, annual interest rate (APR), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: Interest is calculated on the outstanding balance, which is highest at the beginning of the loan term.

Q2: How can I pay less interest overall?
A: Make additional principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What happens if I make extra payments?
A: Extra payments reduce principal faster, which reduces future interest and may shorten the loan term.

Q4: Why is my monthly payment different from the calculator?
A: Actual payments may include fees, insurance, or taxes not accounted for in this basic calculator.

Q5: Does refinancing affect amortization?
A: Yes, refinancing resets the amortization schedule based on new loan terms.