topic Auto loan calculation in Auto Loans

Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 01:53:16 GMT

Hey everyone!

Hoping I can get some help with some auto loan calculations.

I currently owe $22,281 on my auto loan at 4.42% APR with 57 months left.

Monthly payments are $422.36

I plan on making a $2500 principal only payment. If I understand correctly my monthly payments won't change but I will be able to pay off the loan quicker and pay less interest.

I did some rough calculations and I think I'm gonna save somewhere around $500 in interest over the length of the loan. Can anyone help me confirm that?

Also, what would my APR be equivalent to with that savings?

Thanks in advance!

Re: Auto loan calculation

Shooting-For-800 — Mon, 28 Jun 2021 02:58:09 GMT

You would only save $250-$300 based on my quick calculation.

I would just try and double up on payments to push out your payment due date. It is a simple interest loan, so you would still save money on interest while improving your cash flow.

Check with your lender on limits for pushing due dates.

Re: Auto loan calculation

incognitony — Mon, 28 Jun 2021 02:49:11 GMT

I calculated it would cut off 7 payments which is roughly 500 savings if you continue to make the normal payments. That worked out to around 3.5% on 22200 balance over 57 months.

Re: Auto loan calculation

Shooting-For-800 — Mon, 28 Jun 2021 03:01:55 GMT

Maybe I am wrong but it seems like

$2500 at 4.43% for 52 months = $2752

$2752 - $2500 = $252

Didn't do the long math

Re: Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 03:10:14 GMT

@Shooting-For-800 wrote:
You would only save $250-$300 based on my quick calculation.

I would just try and double up on payments to push out your payment due date. It is a simple interest loan, so you would still save money on interest while improving your cash flow.

Check with your lender on limits for pushing due dates.

Can you show me how you did the math to find that savings?

How/why would doubling my payments and pushing out my due date be more beneficial?

Or are you saying the savings would be about the same?

Re: Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 03:03:10 GMT

@incognitony wrote:
I calculated it would cut off 7 payments which is roughly 500 savings if you continue to make the normal payments. That worked out to around 3.5% on 22200 balance over 57 months.

That's what I was thinking too, just didn't know if I was doing the math right.

Re: Auto loan calculation

Shooting-For-800 — Mon, 28 Jun 2021 03:05:10 GMT

Savings would be similar and keep cash in the bank and give you emergency money breathing room.

People screw up all the time paying extra on homes then not able to make on time payment later down the road.

Just a cautious way to approach paying extra while still saving interest.

Re: Auto loan calculation

incognitony — Mon, 28 Jun 2021 03:04:41 GMT

The numbers plugged in a payment calculator says 59 months left. It still reduces 7 months at around 2950 over 52 months.

Re: Auto loan calculation

Shooting-For-800 — Mon, 28 Jun 2021 03:08:14 GMT

Not sure how you can save more interest than the interest you would pay on the $2500 difference which is not $500. Again, just quick math on an iPad sitting in bed.

Re: Auto loan calculation

incognitony — Mon, 28 Jun 2021 03:33:44 GMT

It reduces the per diem interest and this assumes all future payments unchanged.

0.302739726×365×4.16666 (50 months)= 460.43

Re: Auto loan calculation

ridgebackpilot — Mon, 28 Jun 2021 19:06:04 GMT

@Roadgeek395 wrote:
I plan on making a $2500 principal only payment. If I understand correctly my monthly payments won't change but I will be able to pay off the loan quicker and pay less interest.

I don't understand why you want to make an additional payment? If you want to save money, why don't you just refinance your auto loan and get a lower interest rate? That will save you a lot more than simply making a principal-only payment.

Re: Auto loan calculation

RSX — Mon, 28 Jun 2021 19:48:30 GMT

^^ might be to avoid getting a new acct

OP - if you have a solid emerg fund already, then go ahead and make the payment - it will shorten your total term - save you on Interest, and drop the Util % for that loan

i always make extra payments on my loans - and it has worked out well for me

Re: Auto loan calculation

Kforce — Mon, 28 Jun 2021 21:21:57 GMT

f you make a payment of $2,500 next month with extra applied to principal

Not all will go to principal, 87.07 would be normal months interest and 2,417.93 for principal credit.

1st month, pmt 2.500, int 87.07, principal=2.417.93, new balance= ~19.863.

Balance $19.863, 52 months , pmt 422.36 @ 4.42% , interest = 1,989

Total interest (1,989+87)=2,076 and (Month 1 & 52 more) = 53 months

Normal remaining interest would be 2539.30

With 2500 as first additional pmt ~2,076 interest

You would save ~ 463 dollars

It will take a total of 53 months

Same as full 22.281 @ 3.697% interest and 422.36/mo

Re: Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 21:44:38 GMT

@ridgebackpilot wrote:
@Roadgeek395 wrote:
I plan on making a $2500 principal only payment. If I understand correctly my monthly payments won't change but I will be able to pay off the loan quicker and pay less interest.
I don't understand why you want to make an additional payment? If you want to save money, why don't you just refinance your auto loan and get a lower interest rate? That will save you a lot more than simply making a principal-only payment.

I just recently refinanced. That's why I'm looking for other methods to save on interest.

Re: Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 21:54:13 GMT

@RSX wrote:
^^ might be to avoid getting a new acct

OP - if you have a solid emerg fund already, then go ahead and make the payment - it will shorten your total term - save you on Interest, and drop the Util % for that loan

i always make extra payments on my loans - and it has worked out well for me

That's what I was thinking as well but I seem to be getting mixed responses

Re: Auto loan calculation

Roadgeek395 — Mon, 28 Jun 2021 21:51:35 GMT

@Kforce wrote:
f you make a payment of $2,500 next month with extra applied to principal
Not all will go to principal, 87.07 would be normal months interest and 2,417.93 for principal credit.

1st month, pmt 2.500, int 87.07, principal=2.417.93, new balance= ~19.863.
Balance $19.863, 52 months , pmt 422.36 @ 4.42% , interest = 1,989
Total interest (1,989+87)=2,076 and (Month 1 & 52 more) = 53 months

Normal remaining interest would be 2539.30
With 2500 as first additional pmt ~2,076 interest
You would save ~ 463 dollars
It will take a total of 53 months
Same as full 22.281 @ 3.697% interest and 422.36/mo

Thank you for the breakdown on the math! If I make an extra $2500 payment it will be after I make my regular monthy payment. I have the option with my lender to make a principal only payment.

Re: Auto loan calculation

Kforce — Mon, 28 Jun 2021 22:46:04 GMT

No strings. ideal numbers, above was worst case normal payment replacement..

$22.281 @ 4.42% & $422.36/mo = interest loss of $2,539.30

- 2500

$19,781 @ 4.42% & $422.36/mo = interest loss of $1.972.02

Savings $567.28 // 52 months of normal payments remaining

Others are correct current loan has 59 months left !

Re: Auto loan calculation

Kforce — Mon, 28 Jun 2021 23:09:13 GMT

@Shooting-For-800 wrote:
Maybe I am wrong but it seems like
$2500 at 4.43% for 52 months = $2752
$2752 - $2500 = $252

Didn't do the long math

The math is :

Interest lost with $22,300 @- 4.42% with 422.36/mo payments

Interest lost with $19.781 @ 4.42% with 422.36/mo payments

Re: Auto loan calculation

Roadgeek395 — Tue, 29 Jun 2021 01:15:59 GMT

@Kforce wrote:
No strings. ideal numbers, above was worst case normal payment replacement..

$22.281 @ 4.42% & $422.36/mo = interest loss of $2,539.30
- 2500
$19,781 @ 4.42% & $422.36/mo = interest loss of $1.972.02

Savings $567.28 // 52 months of normal payments remaining

Others are correct current loan has 59 months left !

I just realized right now I made a typo in my original post! I still owe 21,281 NOT 22,281 sorry for the confusion! I was wondering why a couple people were saying 59 months remaining, sorry!!

Now with the accurate numbers, and 50 months remaining after the extra payments, what would my savings be?

Re: Auto loan calculation

incognitony — Tue, 29 Jun 2021 01:45:13 GMT

The numbers will be roughly the same as you are still dropping about 7 months off the loan. Kforce will probably get us the answer but roughly saving you $10-20 less than the original figures.