Any fixed-rate loan — personal, auto, or otherwise — follows the same math: a set monthly payment that covers both interest and a shrinking slice of what you borrowed, until the balance hits zero.
How the monthly payment is calculated
The formula solves for a fixed payment that fully pays off the loan, with interest, over the exact term you choose. Early payments are mostly interest; later payments are mostly principal — even though the payment amount itself never changes.
Why the interest rate matters so much
A higher rate doesn't just cost more each month — it shifts more of every early payment toward interest instead of principal, meaning you build almost no equity in the loan for longer.