To calculate early repayment for a car loan, determine the remaining principal balance using the loan's amortization schedule or a formula. The remaining balance can be calculated as: Remaining Principal = Loan Amount × [(1 + (Monthly Interest Rate)^Remaining Payments)

(1 + Monthly Interest Rate)^Total Payments)] / [(1 + Monthly Interest Rate)^Total Payments - 1]. Alternatively, use online calculators or spreadsheet functions like `CUMPRINC` to sum interest for remaining payments. Subtract any prepayment penalties if applicable. Adjust future monthly payments by dividing the remaining principal by the number of payments left. For example, a $20,000 loan at 5% annual interest over 60 months with 30 payments remaining would have a remaining balance of approximately $12,500, reducing monthly payments to $208.

Early repayment reduces total interest paid and accelerates debt freedom by leveraging the time value of money. Data from the Consumer Financial Protection Bureau (2022) shows that borrowers who refinance or prepay auto loans save an average of $3,500 to $7,000 over the loan term. A Bankrate study (2023) found that paying off a car loan two years early lowers the average interest burden by 18%, equivalent to 12 months of payments. This is because interest compounds on the remaining principal, so reducing the balance early minimizes future interest calculations. Additionally, prepayment can improve credit scores by demonstrating responsible financial behavior, as reported by Experian (2023). However, borrowers should verify if their loan includes prepayment penalties, which could offset savings. For instance, a 1-2% penalty on a $15,000 loan might erase potential savings from early repayment. Ultimately, calculating early repayment requires balancing immediate financial capacity against long-term interest savings and potential penalties.