Car loan amortization refers to the schedule of gradual payment of the car loan oftentimes on a monthly basis. The car loan amortization schedule shows the amount that is applied to the interest and the principal on each payment. Car loan amortization schedule also shows the remaining balance of the car loan after the payment is made.

Car loan amortization can be calculated using the online car loan calculator in order to know the amount of monthly payment you need to pay for the car loan. In order to make the car loan amortization schedule you need to compute the interest of the loan you are required to get the purchase price or selling price of the car before tax. Then deduct the trade in amount to the gross selling price of the vehicle. The net price is multiplied to the sales tax rate in order to get the sales tax. Then add sales tax and fees to the gross purchase price to get the total price of the car. Then deduct the amount you paid as down payment. Also deduct the net trade-in amount. Net trade-in refers to the trade-in value less the balance owed on the car being traded in. After deducting down payment and net trade-in amount you will arrive at the Loan Amount. The loan amount is the value needed to arrive at the interest rate per annum. You need to multiply the interest rate with the number of years the loan is applicable to get the total interest payable. Then spread this interest to the total loan term to get the monthly payments needed.

From the auto loan amortization schedule you can see the payment, principal, interest and loan balance. Total monthly payment is comprised of payments for the principal and interest. As monthly payments are applied to the car loan amortization, the schedule will show an increasing amount being applied to principal while there is a decreasing amount applied to the interest. Amount applied to the principal is arrived at by deducting interest to the total payments. Loan balance is deducted with the amount being applied to the principal in order to get the succeeding month’s loan balance.

A typical example of car loan amortization schedule looks like this:

Payment    Principal        Interest Loan          Balance 
                                                                        $ 18,590
$ 463         $323                $ 139                          18,267
$ 463         $ 326               $ 137                          17,941
$ 463         $ 328               $ 135                          17,613

The car loan amortization schedule will continue until the car loan is fully paid and the loan balance is equal to zero.