Auto Loan Interest-Only Calculator
This calculator compares an interest‑only auto loan structure (pay only interest for a fixed initial period, then amortize) with a fully amortizing loan that repays principal and interest over the full term.
Use realistic inputs for principal, APR, payment frequency, interest‑only length, and total term. Results show periodic payments, total interest, and total cash paid for clear decision support.
Calculates the periodic interest‑only payment during the interest‑only period, then the amortizing payment that repays principal over the remaining term.
Inputs
Results
Interest‑Only Payment (per period)
$137.50
Amortizing Payment (per period after IO)
$143.45
Total Interest Paid
$73,140.70
Total Cash Paid
$103,140.70
| Output | Value | Unit |
|---|---|---|
| Interest‑Only Payment (per period) | $137.50 | — |
| Amortizing Payment (per period after IO) | $143.45 | — |
| Total Interest Paid | $73,140.70 | — |
| Total Cash Paid | $103,140.70 | — |
Visualization
Methodology
Interest‑only periodic payment equals the principal multiplied by the periodic interest rate: principal × (APR/100 ÷ payments per year). During the interest‑only period, principal remains unchanged.
After the interest‑only period the calculator computes the amortizing payment required to repay the principal over the remaining number of periods using the standard annuity formula.
All rate calculations use the nominal APR divided by the payment frequency to obtain a periodic rate; compounding between payment periods is not modeled beyond that periodic rate.
Worked examples
Example 1: $30,000 principal, 5.5% APR, monthly payments, 2‑year IO, 60‑year term. The calculator shows the monthly interest‑only payment during year 1–2, the monthly amortizing payment after year 2, and total interest over the loan life.
Example 2: Shorter term reduces total interest in a fully amortizing loan; interest‑only can lower early payments but often increases total interest unless followed by refinancing or principal prepayments.
Further resources
Expert Q&A
Does this calculator include fees, taxes, or insurance?
No. This tool models interest and principal only. Add fees, taxes, and insurance to your budget separately; they are not included in payment or total cost outputs.
Is APR the same as the periodic rate used here?
This calculator uses the nominal APR divided by payments per year to compute a periodic rate. It does not perform additional APR to effective annual rate conversions or include fees in APR.
What happens if the interest‑only period equals the full term?
If the interest‑only period equals the total term, the tool shows zero amortization periods and an amortizing payment of zero; total interest equals the interest paid during the IO period.
How accurate are the results?
Results follow standard finance formulas. Rounding and floating‑point arithmetic can introduce small differences; see the accuracy and standards notes in citations.
Sources & citations
- Consumer Financial Protection Bureau — Understanding auto loans and disclosures — https://www.consumerfinance.gov
- NIST Special Publication — Guidelines on computational accuracy and numerical methods — https://www.nist.gov/publications
- ISO Standards — Financial services and numeric data quality guidance — https://www.iso.org
- IEEE 754 — Standard for floating‑point arithmetic (numeric reliability considerations) — https://standards.ieee.org/standard/754-2019.html
- OSHA — Not directly financial, cited for risk management practice recommendations — https://www.osha.gov