Estimate Your Monthly Car Payments in Seconds
Calculation Method
This calculator uses the standard amortized loan formula to find your monthly payment. It factors in the principal amount (vehicle price minus down payment and trade-in, plus sales tax), the annual interest rate, and the loan term in months.
Monthly Payment Formula
M = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ – 1]
Where:
- M = Monthly Payment
- P = Principal Loan Amount (Amount Financed)
- r = Monthly Interest Rate (Annual Rate / 12 / 100)
- n = Number of Months (Loan Term)
Calculation Steps
- Calculate sales tax and add it to the vehicle price.
- Subtract down payment and trade-in value to get the principal.
- Convert the annual interest rate to a monthly rate (APR / 12 / 100).
- Apply the amortization formula to find the monthly payment.
- Multiply the monthly payment by the loan term to get the total loan amount.
- Subtract the principal from the total loan amount to get total interest.
References
- Standard amortization formula used by financial institutions
- Based on compound interest principles
- Compliant with Truth in Lending Act (TILA) requirements
Note: This calculator provides estimates for planning only. Actual loan terms, interest rates, and payments may vary based on credit score, lender policies, and fees not included in this calculation.