Ok, help me out here...I just put together my entire payment history for a certain car loan that we just paid off last year... I did this out of curiosity to see how much we saved in paying off the loan early...
background -
got a car loan in Oct 03 in the amount of $12,105.97 at 4.75%, with an projected interest total of $1,198.68 after 48months.
Paid off the car loan in Jul 06 (33 months later). I looked at all my payments throughout the time and the total I paid in interest is actually $1,054.48 which means I only saved $144.20 by paying off this loan 15 months early. How can the savings be that little? There were no prepayment penalties or anything like that. I just can't believe that we didn't save more money than that. The average interest charged each month amounted to about $32 so shouldn't I have saved around $32 x 15 months worth of interest (or $480)?
I might be confusing myself on this one!
car loan schedule confusion
January 12th, 2007 at 06:57 pm
January 12th, 2007 at 07:02 pm 1168628573
January 12th, 2007 at 07:10 pm 1168629017
January 12th, 2007 at 07:13 pm 1168629225
January 12th, 2007 at 07:30 pm 1168630240
January 12th, 2007 at 07:36 pm 1168630605
I think that if you started making the big payment after a year or so, that might explain why the interest is lower than what you expected.
Just to illustrate, if you take the spreadsheet. Put in a certain loan amount, IR, loan period and then put in an amount in the "Extra payment" column on the very first payment due. look at the Total interest. Then undo.
Put that exact same extra payment amount but in the very last payment due and look at the total interest. You'll see that the latter has almost no effect on the total interest.
January 12th, 2007 at 08:18 pm 1168633117
Thanks.
January 12th, 2007 at 08:53 pm 1168635193
January 12th, 2007 at 09:49 pm 1168638552