AUTOMOBILE LOAN
INTEREST IS PAID ON
A DECLINING BALANCE

AUTOMOBILE INTEREST IS PAID
ON A DECLINING BALANCE.

FOR PURPOSES OF KEEPING THIS SIMPLE
I AM AMORTIZING EQUAL AMOUTS EACH YEAR.
THIS IS NOT ACTUALLY HOW IT IS CALCULATED
BUT FOR THE POINT I AM SHOWING
IT WILL BE ALRIGHT.

BORROW $40,000 FOR 60 MONTHS

INTEREST IS CHARGED ON
THE REMAINING BALANCE

AFTER 1 YEAR BALANCE = $32,000
AFTER 2 YEARS BALANCE = $24,000
AFTER 3 YEARS BALANCE = $16,000
AFTER 4 YEARS BALANCE = $8,000
AFTER 5 YEARS BALANCE = $0

INTEREST IS PAID ON THE
REMAINING BALANCE