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Car Loan Calculator: An Example. ... That means, even if you pay off your car early, the payoff quote will include all the interest you would have paid had you kept the loan open. In this case ...
That extra amount should go directly toward the principal, especially if you specify that intention when you make your payment. Use an auto loan early payoff calculator to find out how much you ...
Before you decide to pay off your car loan early, know the direct and indirect disadvantages of doing so, including: Prepayment Penalty.
Also known as the "Sum of the Digits" method, the Rule of 78s is a term used in lending that refers to a method of yearly interest calculation. The name comes from the total number of months' interest that is being calculated in a year (the first month is 1 month's interest, whereas the second month contains 2 months' interest, etc.).
where: P is the principal amount borrowed, A is the periodic amortization payment, r is the periodic interest rate divided by 100 (nominal annual interest rate also divided by 12 in case of monthly installments), and n is the total number of payments (for a 30-year loan with monthly payments n = 30 × 12 = 360).
Similarly, a loan taken out to buy a car may be secured by the car. The duration of the loan is much shorter – often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. In a direct auto loan, a bank lends the money directly to a consumer.