How Do You Calculate Extra Principal Payments On Auto Loans?
Whenever you make a car payment, a portion of your payment goes toward paying the interest on the loan and the remainder of your payment is applied to the loan’s principal–which is the amount you originally borrowed. If you choose, you may make larger or more frequent payments on your auto loan in order to pay down the balance more quickly. If you would like to pay off your auto loan early, you must calculate the correct payment amount each month to reach your goal. Choose a date by which you would like to pay off your auto loan. Calculate the number of months between the current month and the month in which you would like to pay off your auto loan. Divide the loan balance by the number of months you have given yourself to pay off the loan. The number you are left with is the payment you must make each month toward the loan’s principal to meet your goal. For example, if you would like to pay a loan with a balance of $6,000 in one year and your current monthly payment is $250, you woul