Calculating "break-even" point with longer term and periodic additional payments

[avv7c0]

I'm hoping that those of you who know how to calculate these kinds of things can help me out. For our mortgage, we have a 30-year loan that we are paying aggressively like a 15-17 year loan. We opted for the longer term to give ourselves the flexibility in times of crisis, while still paying off the loan quickly as long as we are able.

I'd like to apply this same strategy to our car purchase--sign up for a longer loan to keep our mandatory payments low, while adding payments throughout to prevent paying more in interest.

So we are currently looking at a 6-year loan at 2.35% interest. Rather than add an extra amount to the payment each month, I'd like to make 3-4 additional payments over the course of each year, during times when cash flow is higher (i.e. not around holidays, Christmas, Birthdays, etc). I don't want to pay more interest than I would on a 4-year loan. Purchase price of the car is $42,000. So how do I calculate the amount of each additional payment I need to make in order to "break-even" from an interest standpoint, while still enjoying the flexibility of a longer term?

I can't wrap my feeble brain around the math necessary.

[Simply827]

On a 72 month loan you'd pay $3071 in interest. On a 48 month loan you'd pay $2046.

I played around with an amorization schedule in Excel for a bit. The numbers will vary based on how early you start paying extra and how far apart those extra payments are.

I assumed that you made an extra payment every 3 months starting with the first month of your loan. You could make 10 extra payments of $1000 and be finished your loan in 55 months (2060 interest). You could make 17 extra payments of 750 and be finished your loan in 51 months (2121 interest, a tad over, but you're at the end).

ETA: 16 payments of $850 gives payoff in 49 months (just about 4 years) haha $2037 interest.

[avv7c0]

You're a rock star!

Are these formulas something you can easily describe, so I can play with the numbers as well (i.e. if the price of the car changes, etc), or is it just too complicated?

If so, no worries, you've given me the gist of what I was looking for.

Thanks so much!

[Simply827]

If you PM me your email over I'll send the spreadsheet to you.

[Simply827]

Note that the more payments you make, the more you push your term to 4 years. Even if you made an extra lump sum payment of 7600 on the first month, your term would still be only 59 months.

The spreadsheet is very customizable. You can change the price of the car, interest rate,  and add in extra payments every month or sporadically like you plan to do.

[Robertwd82]

http://www.myamortizationchart.com/auto-loan-amortization-calculator/

http://www.vertex42.com/Calculators/loan-amortization-calculator.html

http://banking.about.com/library/calculators/bl_LoanAmortizationCalculator.htm