Financing a car is a significant financial decision. A car loan calculator helps you understand the basic terms of your loan, including the monthly payment, total interest paid, and the loan's duration. However, many borrowers can benefit from making extra payments towards their car loan. This calculator is designed to show you the powerful impact of those additional payments on your loan's payoff timeline and the total interest you'll save.
How the Calculator Works
The calculator first determines your original loan's monthly payment and total interest based on the principal amount, annual interest rate, and loan term. It then recalculates these figures by adding your specified extra monthly payment. The core of the calculation involves an amortization formula, which is used to determine how each payment is allocated between principal and interest over the life of the loan.
Original Monthly Payment (M): M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1]
Where:
P = Principal Loan Amount
r = Monthly Interest Rate
n = Total Number of Payments (Loan Term in Years * 12)
Amortization Schedule Simulation: The calculator simulates the loan's amortization month by month. For each month, it calculates the interest due, subtracts it from the payment, and then reduces the principal by the remaining amount. When extra payments are added, the principal is reduced faster, leading to less interest accruing in subsequent months and a shorter loan term.
Total Interest Paid: (Monthly Payment * Number of Payments) – Principal Loan Amount
Why Make Extra Payments?
Save Money on Interest: This is the most significant benefit. By paying down the principal faster, you reduce the amount on which interest is calculated, leading to substantial savings over the life of the loan.
Pay Off Your Loan Sooner: Extra payments can shave months or even years off your loan term, freeing you from debt faster and allowing you to allocate those funds elsewhere.
Build Equity Faster: For leased vehicles or loans with specific equity requirements, paying down the principal faster helps you build equity more quickly.
Financial Flexibility: Being debt-free sooner provides greater financial freedom and peace of mind.
Tips for Making Extra Payments
Check Your Loan Agreement: Ensure there are no prepayment penalties. Most car loans do not have them, but it's always wise to check.
Specify Application: When making an extra payment, clearly instruct your lender to apply the additional amount directly to the principal. Otherwise, they might simply apply it to your next scheduled payment.
Consistency is Key: Even small, consistent extra payments can make a big difference over time.
Round Up Payments: If you can't commit to a fixed extra amount, try rounding up your regular payment to the nearest $50 or $100.
Use this calculator to experiment with different extra payment amounts and see how they can accelerate your car loan payoff and save you money. The results might surprise you!
function calculateCarLoan() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var extraPaymentMonthly = parseFloat(document.getElementById("extraPaymentMonthly").value);
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(extraPaymentMonthly) || extraPaymentMonthly 0) {
originalMonthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
originalMonthlyPayment = loanAmount / numberOfPayments;
}
originalMonthlyPayment = Math.max(originalMonthlyPayment, 0); // Ensure payment is not negative
// Calculate Original Total Interest and Term
var originalTotalAmountPaid = originalMonthlyPayment * numberOfPayments;
originalTotalInterest = originalTotalAmountPaid – loanAmount;
originalTermMonths = numberOfPayments;
// Calculate New Loan Payoff with Extra Payments
var remainingBalance = loanAmount;
var totalPaidWithExtra = 0;
var monthsWithExtra = 0;
var totalInterestWithExtra = 0;
var currentMonthlyPayment = originalMonthlyPayment + extraPaymentMonthly;
// Handle case where extra payment alone is enough to pay off loan quickly
if (currentMonthlyPayment > 0) {
while (remainingBalance > 0) {
var interestForMonth = remainingBalance * monthlyInterestRate;
var principalForMonth = currentMonthlyPayment – interestForMonth;
// Ensure principal payment doesn't exceed remaining balance
if (principalForMonth > remainingBalance) {
principalForMonth = remainingBalance;
currentMonthlyPayment = interestForMonth + principalForMonth; // Adjust final payment
}
remainingBalance -= principalForMonth;
totalPaidWithExtra += currentMonthlyPayment;
totalInterestWithExtra += interestForMonth;
monthsWithExtra++;
if (monthsWithExtra > 10000) { // Safety break for potential infinite loops
alert("Calculation exceeded maximum iterations. Please check your inputs.");
return;
}
}
} else { // If no extra payment or original payment is zero, use original calculation
monthsWithExtra = originalTermMonths;
totalInterestWithExtra = originalTotalInterest;
totalPaidWithExtra = loanAmount + originalTotalInterest;
}
var interestSavings = originalTotalInterest – totalInterestWithExtra;
var timeSavedMonths = originalTermMonths – monthsWithExtra;
// Display Results
document.getElementById("originalMonthlyPayment").textContent = formatCurrency(originalMonthlyPayment);
document.getElementById("newMonthlyPayment").textContent = formatCurrency(currentMonthlyPayment);
document.getElementById("originalTermMonths").textContent = formatNumber(originalTermMonths) + " months";
document.getElementById("newTermMonths").textContent = formatNumber(monthsWithExtra) + " months";
document.getElementById("originalTotalInterest").textContent = formatCurrency(originalTotalInterest);
document.getElementById("newTotalInterest").textContent = formatCurrency(totalInterestWithExtra);
document.getElementById("interestSavings").textContent = formatCurrency(interestSavings);
document.getElementById("timeSaved").textContent = formatTime(timeSavedMonths);
}
function formatCurrency(amount) {
if (isNaN(amount) || amount < 0) return "-";
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function formatNumber(num) {
if (isNaN(num) || num < 0) return "-";
return num.toFixed(0).replace(/\d(?=(\d{3})+$)/g, '$&,');
}
function formatTime(months) {
if (isNaN(months) || months 0) {
timeString += years + " year" + (years !== 1 ? "s" : "");
}
if (remainingMonths > 0) {
if (timeString.length > 0) timeString += " ";
timeString += remainingMonths + " month" + (remainingMonths !== 1 ? "s" : "");
}
if (timeString.length === 0) return "0 months";
return timeString;
}