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Why is the balance of my car loan barely moving?
I've paid my first three months on my car loan, but the balance is barely moving. What gives?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Everyone knows the frustration of a barely moving
car loan
balance after first opening a loan. But have faith! It’ll start dropping over time.A car loan balance barely moves in the first few months because any type of installment loan is front-loaded with interest. This means that you’re paying interest on the total balance of your loan at the current moment. The higher the balance is, the more you pay toward interest and the less you pay toward the balance.
The longer you go into the loan, the more money goes toward the principal rather than interest. Over time, you’ll see your balance go down exponentially compared to the first few months. Just have patience, keep paying on time, and you’ll see results.
Want some extra money to pay down your car loan each month? Check out the
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- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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