Enter the purchase price of the vehicle
Specify the annual interest rate percentage for the loan
Set the duration of the loan in years
Provide the value of any trade-in vehicle to reduce the loan amount
Enter any upfront down payment amount to lower the principal
Account for applicable sales tax percentage on the vehicle purchase
Include any additional title, registration, or other fees
Compute and display the monthly payment, total interest paid, and overall loan cost
Auto loans allow consumers to finance the purchase of a vehicle over an extended period by borrowing money from a lender and repaying it in installments with interest. Key factors impacting loan costs include the vehicle price, interest rate, loan term, trade-in value, down payment, taxes, and fees. Using a calculator helps estimate accurate monthly payments and total borrowing costs based on the specific loan details.
The auto loan calculation is based on the following formula:
Monthly Payment = [Loan Amount * (Interest Rate / 12)] / [1 - (1 + Interest Rate / 12)^(-Loan Term * 12)]
Where:
- Loan Amount = Vehicle Price - Trade-in Value - Down Payment + Sales Tax + Fees
- Interest Rate is the annual percentage rate divided by 100
- Loan Term is the duration in years
The total interest paid is calculated as:
Total Interest = (Monthly Payment * Loan Term * 12) - Loan Amount
And the total payment over the life of the loan is:
Total Payment = Loan Amount + Total Interest