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How Does Car Loan Amortization Work?

Written By: admin - Feb• 12•13

Curious About Car Loan Amortization?

Don’t have any idea how car loan amortization works? Don’t worry. You’re definitely not alone. Most people don’t. That’s what this article is about.

Rather than try to explain to you in words how this process works, I’d rather just give you a graphical representation about what happens as the loan starts to be paid on.

Basically, if your loan starts at $10,000, then the amount of interest that you pay out of each payment will be more towards the beginning of the loan and less towards the end of the loan. This is because the interest is calculated based on how much you still owe on the vehicle, if that makes any sense.

For example, say you’re half way through your payments, and you only owe $5,000 now. Since interest on $5,000 is cheaper than interest on $10,000, a smaller portion of your monthly payment will go toward interest.

Still confused? I sure hope not, but if you are, don’t worry! Simply type in your loan information into the car loan calculator below, and hit the “calculate” button. You’ll then see a screen pop up that will show you exactly what your amortization schedule looks like. This should help to take some of the mystery out of knowing how a car loan amortization works.

Car Loan Calculator
Vehicle Price
Down Payment
Trade in Amount
Owed on Trade
Interest Rate
Sales Tax Rate
Term (months)
Start Date
Calculate
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