Q:

What information is on an auto loan amortization chart?

A:

Quick Answer

An auto loam amortization chart includes the date of each scheduled payment; the amount of the payment; the amount that goes toward paying the principal and to the interest for each payment; the amount of total interest paid; and remaining balance after each payment, according to Bankrate. The last payment on the chart reveals the loan's pay-off date.

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Full Answer

The amortization chart reveals how the process of the loan works, with each monthly payment paying off a portion of the interest owed over the course of the loan and a portion of the principal balance, explains HSH.com. These are the third and fourth columns in the amortization chart. At the beginning of such loans, a much greater portion of the payment goes toward paying the interest owed. As this amount decreases, a larger portion of subsequent payments go toward paying off the principal.

One of the advantages of using these types of loans when buying a car is that the borrower can make lump sum payments any time, reducing the total amount of interest paid over the life of the loan, reports HSH.com. When a borrower makes such a payment, the amortization chart is revised to reflect the changes. When taking out simple interest add-on loans, lump sum payments do not change the total cost of the loan.

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