Monthly Payment Formula
Your monthly payment is calculated using the standard amortization formula:
M = P × [r(1 + r)^n] / [(1 + r)^n - 1]
- M = Monthly payment
- P = Principal loan amount
- r = Monthly interest rate (annual rate / 12)
- n = Number of months
What Goes Into Your Loan Amount
- 1. Vehicle Price: The sticker price of the car minus any trade-in value
- 2. Sales Tax: Calculated as a percentage of the vehicle price (varies by state)
- 3. Fees: Title, registration, documentation, and dealer fees
- 4. Down Payment: The amount you pay upfront, which reduces the loan amount
Tips for Getting the Best Auto Loan
- Make a larger down payment: Putting 20% or more down reduces your loan amount and monthly payments
- Shop around for rates: Compare offers from banks, credit unions, and online lenders
- Consider shorter loan terms: While monthly payments are higher, you'll pay less interest overall
- Check your credit score: A higher credit score typically qualifies you for better interest rates
- Factor in total cost: Don't just look at monthly payments—consider the total amount you'll pay over the life of the loan
Important Notes
- • This calculator provides estimates based on the information you enter
- • Actual loan terms may vary based on creditworthiness and lender requirements
- • Insurance, fuel, maintenance, and other ownership costs are not included
- • Always read the fine print and understand all terms before signing a loan agreement