![]() As the amount you need to repay goes down, you will progressively pay less interest. With each payment you make, the principal decreases. When you start making payments on a new loan, the amount of your payment that goes toward the interest will be much higher than when you are nearing the end of the loan. The amount you pay each month is the same, but the money is distributed differently. When a loan is amortized, the amount of your monthly payment that goes toward the principal and interest changes with each payment. It refers to how much of your payments go toward the principal and interest. Auto loan amortization is simply industry language for the process of repaying a vehicle loan over time. When you first see the term “auto loan amortization,” you may worry about understanding such a complicated concept. ![]() Keep reading to learn more about auto loan amortization. ![]() It can also help you make important loan decisions. Understanding how auto loan amortization works can help you determine how much interest you will pay for the vehicle you are buying. Although it may sound complex, auto loan amortization is very simple. If you are shopping for a new or used vehicle, a term you may have encountered when applying for a loan is auto loan amortization.
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