Why is most of my early payment going toward interest?
Interest is calculated on the remaining balance. Early in the loan, the balance is largest, so daily interest accrual is highest. As you pay down principal, less interest accrues.
Automotive
Car Loan Amortization Calculator
Break down monthly payments and interest for your new or used car financing scenario.
Plan Your Auto Financing
Figure out how much you'll pay every month and in total interest.
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What this calculator does
A car loan amortization schedule breaks down how your monthly payment is split between principal and interest over the life of your auto financing agreement. Understanding amortization is crucial for comprehending the true cost of car financing and making decisions about extra payments.
How it works
You input the car price, down payment, loan term in months, and annual interest rate. The calculator computes the monthly payment using the standard loan amortization formula, then generates a detailed schedule showing each payment's breakdown. Early payments are heavily weighted toward interest.
Formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P = Principal, r = monthly interest rate (annual ÷ 12), n = number of months.
Tips for using this calculator
- Compare APR across multiple lenders—even 0.5% difference saves hundreds over 5 years
- Make bi-weekly payments to complete the loan faster
- Put down at least 20% to avoid being underwater on the loan
- Shorter loan terms cost less in total interest
- Consider extra principal payments to reduce total interest paid
Frequently asked questions
How much would I save with a higher down payment?
Every dollar of down payment reduces your financed amount, lowering both monthly payments and total interest. Increasing down payment from $5,000 to $10,000 typically saves $1,000+ in interest.
What's the difference between APR and interest rate?
Interest rate is the percentage charged on principal. APR includes the interest rate plus fees and costs, providing a more complete picture of borrowing cost.