Bankrate Auto Loan Calculator with Extra Payments

How to Use This Calculator

Using this calculator is simple:

1. Enter your auto loan amount in the "Loan Amount" field.
2. Input your annual interest rate in the "Interest Rate" field.
3. Specify your loan term in years in the "Loan Term" field.
4. Enter any extra payments you plan to make in the "Extra Payment" field.
5. Click the "Calculate" button to see your results.

The calculator will display your monthly payment, total interest paid, and how long it will take to pay off the loan with your extra payments.

How Auto Loan Calculations Work

Auto loans are typically calculated using the amortization formula:

This formula calculates the fixed monthly payment required to pay off the loan over the specified term. When you make extra payments, the loan term is reduced, and you pay less in total interest.

Understanding Extra Payments

Making extra payments on your auto loan can significantly reduce your interest costs and pay off your loan faster. Here's how it works:

• Each extra payment reduces the principal balance of your loan.
• With a smaller principal, your monthly payments decrease over time.
• You'll pay off the loan earlier, saving on interest charges.

For example, if you have a $20,000 loan with a 5% annual interest rate and a 5-year term, making an extra $100 per month would pay off the loan in about 4 years instead of 5, saving you approximately $1,000 in interest.

Worked Example

Let's look at a specific example to illustrate how extra payments work:

With these inputs, the calculator would show:

• Original monthly payment: $472.44
• Total interest paid without extra payments: $5,429.44
• With $200 extra payments:
• Loan paid off in 48 months instead of 60
• Total interest paid: $3,229.44
• Interest savings: $2,200

This example demonstrates how extra payments can significantly reduce your interest costs and pay off your loan faster.