Car Loan Amortization

Car Loan Amortization is the periodic repayment schedule of your car loan which is represented in the form of an amortization table. The table consists of amount of principal, the interest payments and the outstanding dues after each EMI payment has been made. 

Overview of Car Loan Amortization Table

While a car loan EMI calculator shows only the monthly instalments that needs to be paid ever month for a fixed rate of interest over a predetermined period. On the other hand, amortization tables give a clearer picture of about how your loan progresses throughout the entire tenure including the EMIs to be paid each month, the total interest, the overdue amount after each EMI, and other data related to the loan. To understand this concept better, see the example given below:

  • Loan Amount - Rs. 15 lakhs
  • Loan Tenure - 6 years
  • Interest Rate - 13%
  • Processing Fee - 2%

Based on the EMI formula, E = P x r x (1+r) ^n/((1+r) ^n – 1), the overall breakup of the total amount payable is as follows:

Monthly EMI - Rs. 30,111

Total Interest Due - Rs. 6,68,003

Processing Fee - Rs. 30,000

Total Amount Payable - Rs. 21,98,003

The below amortization table represents your repayment schedule for a loan amount of Rs.15 lakhs at 13% interest rate in regular instalments over a loan tenure of 6 years (2018 to 2023):

Year Principal PaidInterest Paid Total Payment( Principal+ Interest) Outstanding Loan Balance
2018Rs. 1, 76, 611
Rs. 1,84,723
Rs. 3,61,334
Rs. 13,23,389
2019Rs. 2,00,989
Rs. 1,60,345
Rs. 3,61,334
Rs. 11,22,399
2020Rs. 2,28,733
Rs. 1,32,601
Rs. 3,61,334
Rs. 8,93,667
2021Rs. 2,60,306
Rs. 1,01,029
Rs. 3,61,335
Rs. 6,33,262
2022Rs. 2,96,236
Rs. 65,098
Rs. 3,61,334
Rs. 3,37,126
2023Rs. 3,37,126
Rs. 24,209
Rs. 3,61,335
Rs 0

What is the benefit of using a car loan amortization table?

With the help of an amortization table, you can easily ascertain when your car loan will be paid off and how much it costs you each month. Depending on the amortization table which represents your car loan repayment schedule, you can easily create a monthly budget to maintain a low debt-to-income ratio. As when you have a high debt-to-income ratio, the chances of loan default also increase. Any kind of loan rejection or default reflects badly on your credit report which acts a red flag for the financial institutions. Thus, affecting your future credit application requests. Therefore, it is essential to create a budget to ensure you make timely EMI payments. Paying your monthly EMIs on time will help you to improve your credit score and thereby increasing your chances of loan approval.