When you borrow money to purchase a car (or home), one of the documents given to you by your lender is an amortization schedule. An amortization schedule outlines your loan payments each month and helps keep you on track.
This is important because you’ve decided it is time to purchase a new car! Search for a new car you would like to purchase. Provide the year, make, and model in the title of your post. Open and complete the Loan Amortization Excel file below to compare how much interest is owed on your car loan when paying the minimum monthly payment versus paying more than the minimum required each month.
Part 1
Enter your chosen values in the green cells in Table 1.
Leave the Optional extra payments zero.
Copy and paste Table 1 (cells B4:K11) into your discussion post, then answer the following question(s).
How much interest will you pay over the life of the loan? Excel will calculate this for you (see Total interest under the Loan Summary).
Look at the Principal column and the Interest column of your amortization schedule. Explain any differences you notice between the start of your loan schedule and the end.
Part 2
Keeping all other factors the same, add an Optional Extra Payment (blue cell), so you are now paying more than the minimum.
Copy and paste your revised Table 1 (cells B4:K11) into your discussion post, then answer the following question.
How many months will it take to pay off your car under this scenario?
Part 3
Compare the amount of interest you pay in Part 1 and Part 2. How much money do you save by paying your car off sooner?
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