1. What is Reverse Auto Loan Amortization?

Reverse auto loan amortization calculates the monthly payment amount based on the loan amount, interest rate, and term. It helps borrowers understand how much they need to pay each month to repay the loan over the specified period.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Loan \) — Total loan amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed monthly payment that covers both principal and interest.

3. Importance of Loan Amortization

Details: Understanding loan amortization helps borrowers make informed decisions about loan terms, compare financing options, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate in percentage, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and amortized loans?
A: Simple loans have interest calculated only on principal, while amortized loans have payments that cover both principal and interest over time.

Q2: How does loan term affect payments?
A: Longer terms result in lower monthly payments but higher total interest paid over the life of the loan.

Q3: What is an amortization schedule?
A: A table showing each payment's allocation between principal and interest, and the remaining balance after each payment.

Q4: Are there prepayment penalties?
A: Some loans charge fees for early repayment. Check your loan agreement for details.

Q5: How accurate is this calculator?
A: It provides standard amortization calculations. Actual loan terms may include additional fees or special conditions.