This came up before but are most auto loans add-on interest?
I haven’t financed a car in years and the last one I did was 0 interest… in another post, someone said auto loans are add-on interest but many of the car loan calculators amortize it.
Google has one site saying most auto loans are add-on but others say they amortize with more interest upfront in the payment.
And which brand has the largest key fob? I got spoiled with the Tesla phone as key and I thought my Chevy key fob was big… the Toyota is gigantic.
I guess I should clarify… by add-on interest it means they calculated the interest and then create a fixed payment where the interest and principal do not change each payment.
In the amortized interest calc, you pay more interest in the beginning and then more principal later. The payment stays fixed, just the amount of interest and principal changes throughout the life of the loan. This is how traditional home mortgages worked and I assumed that’s how car loans work because all the online car loan calculators show this type of payoff.
But in a thread I posted here a few months ago where I was comparing the equity curve of a lease vs a loan, another member said that auto loans do not have a interest/principal curve like home loans.
Online they refer to the former as add-on interest and if you are saying they are not that means there is an equity curve with a loan vs a lease.
Yes, typical car loans are not add on interest. They are a standard amortization schedule where early payments are higher interest amounts and lower principal.
Add on interest in car loans typically only shows up in shorter term, poor credit loans.
