Amortization is the process of paying off a loan. Every month a portion of the principal and some interest is paid. Amortization formula is the calculation of the payment amount per period. An amortization calculator is used to find the periodic payment amount due on a loan based on the amortization process.
Auto loan amortization calculator has a table which shows how the auto loan works month by month. This gives an idea of the interest paid over the years and the balance to be paid at any given time. After filling in the information related to the loan, the calculate button should be clicked and a table will appear in the text box below.
Using the amortization table, payment of more money than the vehicles' worth can be avoided. To achieve this, some estimation on the vehicles value after certain number of months should be made. Then, amortization table can be used to see how much is left on the loan. Amortization table is already filled in for a general car purchase. Generally auto loans run from 48 to 72 months. The longer the term, the more the interest cost.
Amortization table takes into account down payment and trade in or cash rebate. Auto loan payment calculator can be used to analyze different types of loans by changing the loan amount, interest rate, term of the loan and the payment frequency. It is also flexible, in the sense, additional payment can be made to pay off the loan early and avoid paying so much interest. Auto loan amortization calculator helps estimate the overall cost of purchasing a car, including the price, sales tax and other fees and changes like destination changes and trade in value of an old car.
Rounding: Actual payments must be rounded to the nearest cent and the spreadsheet takes care of this process.
Zero balance: In amortization spreadsheet, the formula in the payment due column checks the last balance to see if a payment adjustment is needed to zero out the balance.
The auto loan payment calculator which is another worksheet in the excel workbook is based on the auto loan amount, annual interest rate, term of the loan and payment frequency. The spreadsheet contains the information about how to use the loan calculator as cell comments. Just entering the value in the white background will suffice. The payment calculator also helps to see how extra payments can help to pay off the loan early thus reducing the interest amount. It contains yellow cells where the values are to be entered and the spreadsheet is left unlocked giving room to modify it further.
The third worksheet comprising loan comparisons creates graph by taking input from the loan payment. This helps to know the different rates of interest, number of payments and the down payment affecting the monthly payment and total amount of interest. The auto manufacturer may offer incentives in the form of cash rebate or low interest rate and the auto loan calculator specifies the cash rebate and the annual interest rate.
Auto Loan Amortization Calculator
Looking for an auto loan is a big process and so many factors are attached to it. First, the buyer has to study about the lender, their loan terms, interest rates etc. Through this, the buyer will have some vague idea about the lender and according to that he can negotiate on the interest rates. The auto loan depends on the credit history of the applicant also. So before going in for a loan, the applicant must improve on his credit score.
Amortizations can be explained as to the method to pay off the loan, more than a period of time taken to repay the loan completely. Amortization not only prevails in case of home loans and mortgages, but also for car loan, credit card dues etc. The process determines the mode of payment over a set period of time. This can be calculated with reference to the loan amount. As it is very much complicated most of the people use online calculators available in the internet. This can be utilized before a decision of the loan amount.
More number of ways are available to calculate the interest amounts, but mostly banks calculate them by using loan amortization table or spread sheet. They help in telling about the best offer available all around. It saves time also. The loan amortization tables are into three types and they are:
Equal Capital - The calculation system displays each equal monthly payment and the total variable payments made to the bank. In this case the repayment amount will get reduced as the expiration date gets nearer.
Spitzer Amortization Table - This types provides a fixed monthly payment, but with variable interest rates through out the repayment period. Fluctuation of interest will be more in this case.
Bolit Amortization Table - The interest only will be paid from the beginning and the principal amount will be paid only after a pre determined period of time.
An amortization calculator is used as a best tool to calculate the loan details and to get some wide range of information, and it is impossible for a normal human being to understand the details without any difficulty. It helps the applicant by telling the amount to be paid monthly and the interest and the principal.
Details to be entered in the calculator are as follows:
Money to be borrowed
Period of loan
By providing these inputs the output will be the amortization schedule with the exact information. This tool can be used to find out the exact loan type. Thus auto loan amortization plays a vital role in auto loan industry.
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