Why the split changes every month
Interest is charged on the balance outstanding, so the first payment carries the most interest. As the balance falls, the interest part shrinks and the principal part grows, even though the payment stays the same.
That is why paying a little extra early has a disproportionate effect: it removes interest from every later payment.
Worked example
A £20,000 loan at 7% over 5 years has a payment of £396.02. After 24 payments, £7,174.18 of principal has been repaid and £2,330.39 of interest has been paid.
The balance is £12,825.82 with 36 payments left, and the interest still to come is £1,431.05. More than half the total interest has already been paid in the first two years.
What the split tells you
If you are thinking of selling or refinancing, the balance is the figure you need to settle, not the amount you originally borrowed.
If you are considering early settlement, compare the remaining interest with any charge. The later you are in the term, the less there is to save.
Inputs for the auto loan principal and interest calculator
Original loan amount
How much you borrowed at the start.
Interest rate (per year)
The yearly rate, charged monthly at one twelfth of the rate.
Original term
The full term of the loan, in years.
Payments made
How many monthly payments you have already made.
First payment date
The date of your first payment, used to show the schedule.
CALCULATOR QUESTIONS
Auto loan principal and interest calculator questions
Why is most of my early payment interest?
Interest is charged on the balance, which is highest at the start. As the balance falls, the interest share falls with it.
How much interest is left after two years?
In the example, £1,431.05 of the original £4,562.87 total, so most of the interest is already paid.
What is the balance after 24 payments?
£12,825.82 on a £20,000 loan at 7% over 5 years, with 36 payments left.
Does overpaying change the split?
Yes. Extra payments go straight to principal, so later payments carry less interest.