Car financing
See how extra payments can help you pay off your car sooner and reduce interest.
Current payment plan
With extra payments
Car loan interest is generally calculated from your remaining balance. Paying extra reduces that balance faster.
As your balance gets smaller, less interest is charged in future months. That can help you pay off the loan sooner while reducing the total amount of interest you pay.
If you owe $16,500 at 8.99% and normally pay $345 per month, adding an extra $500 each month can significantly reduce the time required to eliminate the loan.
Use the calculator above to compare your normal payment schedule with a faster payoff plan.
Make sure your lender allows additional principal payments without penalties.
Extra money should reduce your principal rather than simply paying future instalments.
Paying debt faster can save interest, but you may still want money available for emergencies and regular expenses.
FAQ
It generally can if the extra payment is applied directly toward the loan principal.
Many loans allow early repayment, but you should check your specific loan agreement for any restrictions or fees.
The effect depends on your current balance, interest rate and remaining repayment period. Use the calculator to compare the difference.
A lump-sum principal payment can reduce your outstanding balance immediately, which may reduce future interest.
DriveMath calculations are estimates for informational purposes only. Actual lender calculations, interest charges and payoff amounts may differ.