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Auto Loan Amortization and How to Calculate It

how to calculate auto loan

Are you interested in calculating the balance of your auto loan amount over a period of time? If so, you will need to understand auto loan amortization.

Morgan Cox defines amortization as: “A schedule that allows some return of the original principal amounts back to the lender. The longer the amortization schedule, the lower the payment.” In other words, auto loan amortization is basically the process of following a repayment plan for a car loan .

Paying Off Your Car Loan

If you are buying a new or used car and do not plan on paying cash, you’ll need to know how auto loan amortization can help pay off your potential loan in a timely manner. Usually, car loans are fully amortizing, meaning that by following the payment schedule and making the payments in full, the automobile will be completely paid off by end of the term of the


Auto Loan Amortization Calculation

If you need to calculate the auto loan amortization rate, the process is fairly easy. First research and find out the price of the car you want to purchase. Next, get a firm quote on the auto loan rates and terms of your loan.

The basic formula for manually calculating loans is Monthly Payment = Principal amount of the loan x  monthly Interest in decimal form/(1 – (1 + monthly interest) – Number of months over which loan is amortized) or MP=[(P x I)/(1-(1=I))] -N

However, there is an easier way to find this calculation. The easiest option is to find an auto loan amortization calculator or car loan calculator online. Carefully enter the numbers and you’ll can easily determine the amortization. Properly calculating the auto loan amortization rate can provide a very clear picture of how much car one can afford.

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