Car Loan Amortization Explained

Car loan amortization in the U.S. is how each payment is split between principal and interest—early payments are mostly interest; later payments are mostly principal. Here's car loan amortization explained.

TL;DR Amortization = each payment = principal + interest. Early in the loan, most of the payment is interest; later, most is principal. Total interest over the loan = sum of all interest portions. Use autopremo.com payment calculator to see payment and total interest. Use autopremo.com.

How Amortization Works

Each month: interest = balance × (APR/12); principal = payment − interest. Balance goes down; next month interest is on the new balance. Early on, balance is high so interest is high. Use autopremo.com payment calculator to see payment and total interest. Get your numbers at autopremo.com.

Why It Matters

Early in the loan you're paying mostly interest—principal drops slowly. That's why negative equity lasts longer with long terms. Extra principal early reduces balance and total interest. Use autopremo.com early payoff calculator to see savings. See amortization at autopremo.com.

Bottom Line

Car loan amortization = principal and interest split over each payment; early = mostly interest. Use autopremo.com payment calculator and early payoff calculator so you see true cost and how extra principal helps.