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car loan schedule confusion

January 12th, 2007 at 10:57 am

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!

Posted in Uncategorized | 8 Comments »

8 Responses to “car loan schedule confusion”

  1. Lau Says:
    January 12th, 2007 at 11:02 am

    People are going to start beating me up for bringing this spreadsheet up again but try putting your payment history into that Loan amortization schedule spreadsheet... See if it matches

  2. all4money Says:
    January 12th, 2007 at 11:10 am

    Thank for the link... I plugged in the numbers and it agrees... a savings of a whopping $144 by paying off the loan 15 months early. It sure does let some of the steam out of thinking I saved "so much" money by paying it off early. Oh, well. I'm glad that I paid it off but it's disappointing to know how little I saved in doing so.

  3. Lau Says:
    January 12th, 2007 at 11:13 am

    $144 is $144... I can understand your frustration, but it's still great! And think about it: you paid the loan!!!!!! Next month, you will not have to make that payment again... YAY! Congrats

  4. LdyFaile Says:
    January 12th, 2007 at 11:30 am

    Sure it might not have saved that much by paying it off early but it's paid off and now you have that amount you were sending in as payment available for other things! Congrats on getting it paid off!!

  5. Lau Says:
    January 12th, 2007 at 11:36 am

    My 2 cents again Smile
    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.

  6. all4money Says:
    January 12th, 2007 at 12:18 pm

    Lau, that kinda makes sense... didn't think of that.

    Thanks.

  7. jriessel Says:
    January 12th, 2007 at 12:53 pm

    I have been doing the same thing - I just started making early payments to my car loan. I downloaded that spreadsheet expecting to be wowed by the amount of interest I was going to save and it ended up being just a few hundred $$. I guess it is better than nothing Smile

  8. Ima saver Says:
    January 12th, 2007 at 01:49 pm

    It is because you paid the majority of the interest during the early months of the loan.

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