Car Loan Calculator

How to calculate Car loan calculator?

Calculate monthly payments by spreading the financed amount over the loan term using the loan's monthly interest rate.

The standard amortization formula is: M = P * r * (1 + r)^n / ((1 + r)^n - 1) where P = principal financed, r = monthly interest rate (annual_rate ÷ 12), and n = number of months.

Using the Car loan calculator calculator: an example

Example values: loan $25,000, down payment $5,000, trade-in $2,000, annual interest 5%, term 60 months.

Step-by-step calculation:

1. Calculate financed principal: $25,000 − $5,000 − $2,000 = $18,000.
2. Convert annual rate to monthly: 5% ÷ 12 ≈ 0.0041667 (monthly).
3. Apply the formula with P = 18,000, r ≈ 0.0041667, n = 60 to get monthly payment M ≈ $340.
4. Total paid ≈ $340 × 60 ≈ $20,382; total interest ≈ $20,382 − $18,000 ≈ $2,382.

Frequently Asked Questions

Does the calculator include taxes and fees?

No. This calculator uses principal, interest, and term only. Include taxes, title, registration, or dealer fees separately when estimating total cost.

Should I use APR or the nominal rate?

Use the annual interest rate you were quoted. If you have an APR that includes fees, using APR gives a more accurate comparison of total borrowing cost.

How do extra payments affect the loan?

Making extra principal payments reduces the loan principal and interest and can shorten the loan term. Recalculate after extra payments to see the updated schedule.

Can I compare different terms or rates?

Yes. Adjust the interest rate, term, or down payment to compare monthly payments and total cost across scenarios before deciding.