How does interest work on my auto loan?

Interest is calculated on a per-payment basis. This means that if you pay the loan off early you will not be charged the remaining interest. For example, if you are on a 60-month loan and pay it off in full at 36 months, you would save 24 months’ worth of interest. Note: If you decide to put extra money down on the loan after you take possession of the car, it will not lower your payment instalments—it will only shorten the length of the term of the loan.