This is a procedure understood as "amortization." To identify your month-to-month mortgage payment over the life of your loan, make sure to take a look at our home loan calculator. On the other hand, installation loans-- like an auto loan-- can either be: "Basic interest add-on" or "Easy interest amortizing" These are in fact written as a single loan; all of the interest that will be due is calculated up front, included to the total of the loan as a finance charge, then that sum is divided over the number of months in the term to reach your month-to-month payment.These work like a home mortgage, with a decreasing loan balance and declining term producing a constant month-to-month payment with changing compositions of principal and interest. Prepaying these can save you some money. There can also still be loans based upon a thing called the "Guideline of 78." These are easy interest add-on loans with a twist; they are structured to have you pay the interest due on the loan first, then once that's done, your payments will cover the principal.If you must hold the loan to term, there is no difference in overall expense when compared to a basic basic interest add-on loan, however if you ought to require to pay the loan off early, you'll discover that you'll still owe most-- if not all-- of the original loan you took regardless of having actually paid for some period of time.