Car Loan Early Payoff Calculator

See how making extra payments influences your loan

Calculation Methodology

Monthly Payment Formula

Monthly payments are determined via the standard loan amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n – 1]
  • M: Monthly installment
  • P: Principal amount
  • r: Monthly rate (APR divided by 12)
  • n: Total payment count

Interest Calculation

During each cycle:

Interest = Outstanding Balance × Monthly Rate
Principal = Payment – Interest Portion
Next Balance = Current Balance – Principal

    Prepayment Impact

    Extra payments go straight toward principal, reducing interest moving forward. Over time this accelerates loan payoff and decreases the overall interest paid.

    Lump Sum Payment

    A single lump sum contribution is entirely applied to principal, providing an immediate reduction in future interest calculations.

    References

    • Financial Mathematics Amortization Rules
    • CFPB Loan Explanation Materials
    • Federal Reserve Lending Guidelines

    Disclaimer: This calculator provides estimated values. Actual loan terms may differ due to lender policies and additional charges. Check with your lender for precise details.