Finance & Business
Auto Loan Calculator
Calculate your monthly car loan payments and total costs
Enter loan details to see your monthly payments and amortization schedule
Related to Auto Loan Calculator
The Auto Loan Calculator uses a standard amortization formula to determine your monthly car loan payments and total costs. It takes into account the loan amount, interest rate, loan term, and optional down payment to provide a comprehensive analysis of your auto loan.
Monthly Payment Formula
The monthly payment is calculated using the formula: PMT = P[r(1 + r)^n]/[(1 + r)^n - 1], where:
• P = Principal loan amount
• r = Monthly interest rate (annual rate divided by 12)
• n = Total number of months
• PMT = Monthly payment
The calculator also generates an amortization schedule showing how each payment is split between principal and interest, and tracks your remaining loan balance over time. This helps you understand how much of your payment goes toward paying down the loan versus interest charges.
The calculator provides several key metrics to help you understand the full cost of your auto loan and make informed decisions about your car purchase financing.
Key Metrics Explained
• Monthly Payment: Your fixed monthly payment amount for the duration of the loan
• Total of Payments: The total amount you'll pay over the life of the loan
• Total Interest: The total amount you'll pay in interest charges
• Amortization Graph: Visual representation of your loan balance over time
The amortization graph shows how your loan balance decreases over time. Early in the loan, a larger portion of each payment goes toward interest, while later payments primarily reduce the principal. This is known as amortization, and understanding this pattern can help you make decisions about extra payments or early loan payoff.
1. How does the down payment affect my auto loan?
A larger down payment reduces your loan amount, which leads to lower monthly payments and less total interest paid over the life of the loan. It can also help you qualify for better interest rates and avoid negative equity in your vehicle.
2. What factors affect my auto loan interest rate?
Interest rates are typically determined by your credit score, loan term, age of the vehicle, down payment amount, and current market rates. Better credit scores and shorter loan terms usually result in lower interest rates.
3. Should I choose a longer or shorter loan term?
A longer loan term results in lower monthly payments but higher total interest costs. A shorter term means higher monthly payments but less total interest paid and faster equity building in your vehicle. Choose based on your budget and financial goals.
4. Can I pay off my auto loan early?
Most auto loans allow early payoff without penalties. Making extra payments or paying off the loan early can significantly reduce the total interest paid. However, check your loan agreement for any prepayment penalties.
5. What is the scientific source for this calculator?
This calculator uses the standard amortization formula widely accepted in financial mathematics and banking. The formula is based on the time value of money principle and compound interest calculations documented in financial textbooks and used by financial institutions worldwide. The methodology follows the guidelines established by the Financial Conduct Authority (FCA) for consumer credit calculations and is consistent with the standardized Annual Percentage Rate (APR) calculation methods used in the UK financial industry.