How to Use Car Loan Amortization Schedule and Calculator Tools

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November 9, 2016

The three main amortization table formats are all available as free downloads.

A car loan amortization schedule allows you to perform the necessary math to derive an approximate monthly payment, as long as you can input all the required information. Auto loan amortization is basically the process of reducing your balance by a periodic amount. Because loan payments normally include a portion of interest paid to the lending institution, calculating a monthly payment is not as simple as dividing the purchase price by the number of months in the loan term. Interest must be accounted for, and this is what leads us to the car loan amortization formula. These calendars are basically Microsoft Excel-based schedules, designed to compute a complete series of payments. They include the payment amount in each payment term, as well the interest rate incurred. Here are some car amortization tables available on the Internet.

Most lenders use one of these three different types of amortization tables to figure out your loan repayment schedule. There are so many variables contained in the calculations, that a table is the easiest and quickest way to do this.

The Spitzer amortization table provides for a monthly fixed rate, but with fluctuations of the interest amounts throughout the loan.

The Bolt amortization table provides for interest payments to be made only at the beginning of the loan. The principle is added after a set period of time.

The Equal Capitol table calculates the loan with a fixed monthly payment schedule. With this table, your payments get smaller as you reach the end of your loan term.

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Car Loan Amortization Formula

To derive the correct answer, you must know the total price for the car, minus any down payment amount that was applied. You must also know the interest rate and the loan term. Input this information into most online auto loan amortization calculators, to derive a final monthly payment amount. The calculator uses figures such as the monthly interest rate and the total number of payments in the loan term to add interest to principal for the final figure.

Amortization Schedules

After figuring the monthly payment using the amortization formula, the car loan amortization schedule is fairly easy to derive. Using the interest rate per payment period (i.e. your yearly interest rate divided by 12 months), multiply this rate by the previous month's balance owed. The principal paid is calculated by subtracting the interest paid from the monthly payment amount. As the loan progresses, you'll notice that the amount of interest paid decreases, while the amount of principal balance paid increases. The last payment on the loan will usually differ slightly, as it needs to be adjusted to account for rounding during calculation of payments.

More finance companies are trying to acquire clients on the basis of cost. This strategy has resulted in free car amortization schedules available on their websites. The schedules are based on a fixed-rate car loan, with options to pay in a weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annual or yearly term. Input the loan amount, and the program computes the installment payments according to the available payment terms in the program.

There are many benefits to looking at an amortization chart. You will be able to see when you can have your car loan paid, and how much principle comes off the amount each month. You will also be able to see what the benefits are if you pay more than your scheduled amount, and how much faster it can allow you to pay off your loan. Looking at the car loan amortization chart, you will be able to determine how many payments you should make ahead to be able to pay less interest on the loan.

Versions of car loan amortization schedules in single and personal usage are downloadable for free from certain providers, while other similar programs are available for a fee. A commercial license for a car amortization loan calendar is also available for a price range of $25 to $40.

Amortization Calculators

An amortization calculator shows the car loan amortization formula used to calculate the details of your loan, and can be helpful when you are shopping for cars. There are factors that go into the formula, like your credit score, that will be helpful for knowing how much of a loan you are able to afford. By seeing the data represented in a chart, it is easy to see how the loan is set up and how much you will really end up paying for it.

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Car loan amortization charts can also be helpful in determining what you want your monthly payment to be. You may be thinking you want a longer length of loan, to make your monthly payments smaller. But after looking at the chart, you may realize this is going to cost you a lot more money over the course of your loan. Using the car loan amortization chart as a way to gauge how much you will actually be paying for the loan, you can see the benefits to either getting a shorter term loan with higher monthly payments, or making extra payments to shorten the length of your loan. Your decision could differ depending on how much you can afford to pay each month and your financial goals in the future.

Understanding the car loan amortization formula can help you make a better decision about your car loan and the type of loan you want to take out. You can run different amortization charts with different figures, to see what the differences are when you change the principle loan amount, number of payments and the different interest rates you can get.

Downloading your Schedule

Several schedules are available for MS Excel, where the amortization calculator is a ready-made template. Simply save the template into your templates folder and load it to start calculating. One such example can be found here. The template is a simple Excel spreadsheet that is easy to use, and is updated with add-on support available in the website.

Using an Online Amortization Calculator

When you sit down to use an amortization calculator, like this one, input all the necessary information, including total amount financed, interest rate and term. A website like Bankrate can provide you with average interest rates that are updated on a daily basis.

Once the result is calculated, an amortization calculator will show you in a table how principal and interest are amortized on a monthly basis. You will find that a simple interest loan is "front-loaded" with interest, meaning that early in the loan a greater proportion of the total monthly payment goes toward interest. As the months and years of your loan move forward, less interest and more principal is paid each month. Using an amortization calculator, you can manipulate different rates, terms and selling prices, to show you how even minute changes can impact your monthly payment or the total amount of interest that you pay.

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