Car Loans

Many individuals opt for auto loans when acquiring a vehicle. These loans function similarly to standard secured loans from financial institutions, typically spanning terms of 36, 60, 72, or 84 months in the U.S. Borrowers are required to make monthly payments, covering both principal and interest, to the auto loan lenders. Failure to repa y the borrowed funds can lead to legal repossession of the vehicle by the lender.

How to Calculate Car Loan Payments?

A car loan, also known as an auto loan, is an agreement between a borrower and a lender. In this arrangement, the lender furnishes the borrower with funds for buying a vehicle, contingent on the borrower repaying the principal amount along with interest over a specified duration. The borrower is ob ligated to make payments, calculated using the formula given below.

• PMT: Loan payment or installment.
• PV: Present value (loan amount).
• i: Period interest rate expressed as a decimal.
• n: Number of payments.

How to USe Car Loan Calculator?

Let’s assume that you want to buy a car which is selling for $ 35,000.You decided to finance your purchase with 60 months and 7% loan. You will make a down payment of $2,000 toward your loan. Now you want to know your monthly installment payment toward the loan. Here is how you can use this calculator.

Vehicle Price:

This is the final price the dealer has agreed to sale the car to you. Let’s enter an amount of $35,000. Vehicle price has to be greater than 0.

Trade in Amount:

If you have a car that you agreed to trade - in with the dealer. This is the price the dealer will buy your used car from you. Let’s enter an amount of $4,000. If you have no car to trade in, simply put 0.

Interest Rate:

This is the interest rate bank/financial institutio n will charge you for the loan. In other words, this is your financing charge. Let’s enter 7%. Interest rate has to be greater than 0% and less than 99.99%.

Term:

This is your loan term. Most common loan terms in the U.S. are 36, 60, 72 or 84 months. Let’s assume that you will repay the entire loan in 5 years. Thus, enter 60 as term. Term (month) has to be greater than 0 and less than 600.

Down Payment:

If you decide to pay a lump sum amount as down payment toward your loan, enter the amount in this field. For example, Let’s enter $2,000. If you decide to pay nothing as down payment, simply enter 0.

Owed on Trade:

If you have a trade in vehicle and it has some outstanding loan, you may need to pay off that remaining loan amount at the trade in. Let’s ass ume that our trade - in car has no outstanding loan and put 0.

Sales Tax:

It depends on the state you are living and/or buying the car. Let’s enter 4% by assuming that the sales tax in your area is 4%. Sales tax has to be greater than 0% and less than 99.99%

Start Date:

This is the inception date of your car loan. The calculator will show today’s date as a default value. You can select your loan starting date from the dropdown calendar.

Once you entered all the numbers as stated above, click on “Calculate” button. The calculator will show the monthly auto loan payment of $598.79, the total car loan amount of $30,240 and total payments over 60 months of $35,927.29.