What It Does

Think of it like a crystal ball for your car loan. You tell it some basic info about your car payment, and it shows you exactly when you’ll be done paying and how much money you’ll spend in total.

What Information You Need to Enter

1. Current Loan Balance

• This is how much you still owe on your car
• Example: If you bought a $30,000 car and paid off $5,000, you’d enter $25,000

2. Interest Rate

• This is the extra money the bank charges you for borrowing
• It’s usually between 3-8% for car loans
• Example: If your loan paperwork says “5.5% APR,” you’d enter 5.5

3. Monthly Payment

• What you pay every month right now
• Example: $450

4. Extra Payment (Optional)

• Any extra money you might add to your payment
• Example: Instead of paying $450, you pay $550 (that’s $100 extra)

What It Tells You

Without Extra Payments:

• “You’ll be done paying in 4 years and 2 months”
• “You’ll pay $3,200 in interest over the life of the loan”
• “Your total cost will be $28,200”

With Extra Payments:

• “If you add $100 extra each month, you’ll pay it off in 3 years and 1 month”
• “You’ll only pay $2,100 in interest”
• “YOU’LL SAVE $1,100 and pay off 1 year and 1 month earlier!“

Why This Matters

Let’s say you have a $20,000 car loan at 6% interest with $400 monthly payments:

• Normal way: Takes 5 years, costs $24,000 total
• Add $50 extra per month: Takes 4 years, costs $22,800 total
• Your savings: $1,200 and 1 whole year of payments!

The Math Behind It

Every month, part of your payment goes to:

1. Interest (money the bank keeps)
2. Principal (paying down what you actually owe)

Early in your loan, most goes to interest. Later, most goes to principal. When you pay extra, it all goes to principal, which means you owe less next month, so you pay less interest next month, and so on.

It’s like a snowball effect – the extra payments compound and save you more and more money over time!

Bottom Line

This calculator shows you the “real cost” of your car loan and proves how powerful even small extra payments can be. Most people are shocked to see they can save thousands of dollars and years of payments with just $50-100 extra per month!