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Are all car loans amortized?
I want to learn more about car loans before I sign a contract for my first one. I keep reading about amortization, but I’m not quite sure what it means. What is amortization? Are all car loans amortized?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
In regard to your question, amortization means that the balance of a loan gradually goes down over time. So yes, all car loans are amortized.
When you make a monthly car loan payment, a certain portion of the payment goes toward the interest (aka the cost of the loan) while another goes toward the principal (aka the cost of the car). The specific amounts that go toward principal and interest payments vary depending on your loan terms and conditions.
However, your lender should provide you with an amortization schedule at closing. You can also find amortization schedules online; search for car loan amortization schedule. The schedule will show the exact amount of money that goes toward the interest and the principal each month for the life of the loan.
By studying the amortization schedule, you can see what you owe, where your money is going, and even strategize ways to pay off your loan early!
Since you’re getting a car loan, make sure to shop around for
car insurance
, as well. Every lender will require full coverage
to protect the asset since they technically own the vehicle until you pay off the loan.To get the best rate on your full coverage auto policy, download the
Jerry
app. As a licensed insurance broker, Jerry lets you search rates from over 50 insurers in minutes. Jerry will even help you buy your new policy and assist in canceling your old one so you don’t have to.View full answer
- Gregory R.
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