Car Loan Calculator with Extra Payments
Loan Summary
Standard Monthly Payment: –
Total Standard Payments: –
Total Interest Paid (Standard): –
With Extra Payments:
New Payoff Time: –
Total Payments Made: –
Total Interest Paid (With Extra): –
Total Savings on Interest: –
Understanding Your Car Loan Calculation
This Car Loan Calculator with Extra Payments helps you visualize how making additional payments on your car loan can significantly reduce the loan term and the total interest you pay over the life of the loan. It calculates your standard loan payments and then shows the impact of adding a consistent extra amount each month.
How the Standard Loan is Calculated:
The calculator first determines your regular monthly car payment using the standard loan payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- M = Your total monthly loan payment (principal and interest)
- P = The principal loan amount (the amount you borrowed)
- i = Your monthly interest rate (annual rate divided by 12)
- n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
Once the standard monthly payment (M) is calculated, the calculator computes the total amount paid and total interest paid assuming only the standard payment is made over the entire loan term.
The Impact of Extra Payments:
When you choose to make an extra monthly payment, the calculator recalculates the loan payoff timeline. Here's how it works:
- The calculator adds your extra monthly payment to the standard monthly payment to determine the total amount paid each month.
- It then iteratively calculates the remaining balance month by month. Each payment first covers the interest accrued for that month, and the remainder goes towards reducing the principal.
- This process continues until the loan balance reaches zero. The number of months it takes determines the new payoff time.
- The calculator sums up all payments made (including the extra amounts) to find the total payments made.
- It then calculates the total interest paid under this accelerated payment schedule.
- Finally, it compares the total interest paid with and without extra payments to show your total savings on interest.
Why Use This Calculator?
- Save Money: Discover how much interest you can save by paying a little extra each month. Even small amounts can add up significantly.
- Pay Off Faster: See how quickly you can become car-payment free, freeing up your finances sooner.
- Budgeting: Helps you understand the total cost of your car loan and plan your budget accordingly, including potential extra payments.
- Informed Decisions: Make more informed decisions when comparing loan offers or deciding on a car purchase price.
Input your car loan details accurately to get the most precise results and understand the power of consistent extra payments.