Last year I got a home loan that follows the standard Rule of 78s amortization schedule. I can easily predict how much of my mortgage payment will go to interest and how much to principal.
A few months ago, I got an auto loan as well, but it doesn't follow any schedule at all! Here are the specifics:
Loan Amount: $24,306 Interest rate: 7.49% Term: 36 months
According to Bankrate.com's calculator, my payment should be $755.96, but instead the bank is having me pay $757.62 each month.
The interest and principal portions also make no sense to me. Here's how my bank breaks them down:
Date Interest Principal Total 08/01/2011 $209.58 $548.04 $757.62 09/01/2011 $151.28 $606.34 $757.62 10/03/2011 $152.00 $605.62 $757.62
Note that my interest payment in October was higher than September's!
I asked the bank about this, and they said my first payment was scheduled for August 1, but the loan closed 42 days prior to that, and the larger monthly payment ($757.62) is due to the accumulated interest during those 42 days.
As for the increasing interest, the bank said that October 1 was a Saturday, and so the payment was not withdrawn until October 3, and so I had to pay 2 extra days of interest, calculated by the simple interest formula.
That makes sense, I guess... But why must it be so complicated? Why doesn't my auto loan follow a standard amortization schedule like my mortgage does? Also, is there some formula or set of rules that explain exactly how the bank computed my monthly payment and interest?