Car Loan Question

At one point, I would like to further break down credit cards and individual loans, but had a coworker (different department) recently come over with a personal finance question that I felt many others may have.

She mentioned how she took out a car loan in October of 2022. Since she's taken it out, she's been able to pay larger monthly payments than required. She wondered if there was an Excel sheet that could show how much sooner her loan would be paid off, compared to just making the regular monthly payments.

Afterwards, I went ahead and created an Excel sheet and was really shocked to see how much sooner her loan would be paid off with an extra $200 per month (this was just an example as I didn't want to ask her for the specific loan amount).

The example: A $50,000 car loan at a 2.5% interest rate - Payments starting October 2022.

At a monthly payment of $800, the last payment date would've been fall of 2027.

At a monthly payment of $1,000, the last payment due date would've been fall of 2026.

This means she would pay off her loan a year earlier!

This wasn't a complete shock, as I am now truly understanding the power of interest and how most loans are pretty predatory (some more than others), but I was still amazed at what an additional $200 a month could accomplish.

There are a few calculators out there if you're ever curious to see what a few extra dollars a month could do for your loans. The Excel sheet I created is pretty simple, and would be more than happy to share it - just send an email.