Auto Loan Calculator

Calculate Your Auto Loan

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How to Calculate Auto Loan Payments

Calculating auto loan payments involves considering several factors such as the vehicle price, interest rate, loan term, and any additional costs. Here's a step-by-step guide on how to use this calculator and understand the calculations behind it.

Formula for Auto Loan Payments

The basic formula used for calculating monthly loan payments is:

\[M = P \cdot \frac{r(1 + r)^n}{(1 + r)^n - 1}\]

Where:

  • \(M\) = Monthly payment
  • \(P\) = Principal loan amount
  • \(r\) = Monthly interest rate (annual rate divided by 12)
  • \(n\) = Total number of months in the loan term

Calculation Steps

  1. Calculate the total cost of the vehicle, including warranty and taxes.
  2. Subtract any trade-in value and down payment to get the loan amount.
  3. Convert the annual interest rate to a monthly rate.
  4. Determine the total number of monthly payments based on the loan term.
  5. Apply the formula to calculate the monthly payment.
  6. Calculate total interest by multiplying the monthly payment by the number of payments and subtracting the loan amount.

Example Calculation

Let's calculate the loan payments for a vehicle with the following details:

  • Vehicle Price: $20,000
  • Warranty: $0
  • Sales Tax: 6%
  • Trade-in Value: $0
  • Down Payment: $0
  • Interest Rate: 5.0% per year
  • Loan Term: 60 months
  1. Total cost: \((20,000 + 0) \times 1.06 = 21,200\)
  2. Loan amount: \(21,200 - 0 - 0 = 21,200\)
  3. Monthly interest rate: \(5.0\% \div 12 = 0.4167\%\) or \(0.004167\)
  4. Number of payments: 60
  5. Monthly payment:
    \[21,200 \cdot \frac{0.004167(1 + 0.004167)^{60}}{(1 + 0.004167)^{60} - 1} \approx 400.21\]
  6. Total interest: \((400.21 \times 60) - 21,200 = 2,812.60\)

Therefore, the monthly payment would be $400.21, and the total interest paid over the life of the loan would be $2,812.60.

Auto Loan Amortization Chart

The amortization chart for your auto loan will be displayed here after calculation.

Amortization Schedule

The amortization schedule for your auto loan will be displayed here after calculation.

The amortization schedule will be displayed here after you calculate your loan.

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