An important tool for understanding amortization (i.e. loans… car loans, home loans, etc) is a Cash Flow diagram. We previously got calculation of Amortization and Cash Flows working properly, but now we have added a visualization tool which will graph the Cash Flow for you!
Values in blue (which point up) represent money or value that you receive. Values in red (which point down) represent money that you send out. When you write a check, that’s a red/down arrow. Here is a preliminary screenshot of common car loan situation:
The “PV” or “Present Value” is what you received today (i.e. the car loan amount of $15,000). The “FV” or “Future Value” is how much you will owe on the loan after 36 payments (i.e. you’ve finished paying the entire loan, so FV is $0). Your interest rate is 5.75% which means that your payments will be $454.63 per month!
Woo! Are you stoked?!