: This ratio compares your loan amount to the car's actual value (found via Kelley Blue Book). An LTV over 100% means you are "upside down" on the loan. The 20/3/8 Rule for Affordability
M=Pr(1+r)n(1+r)n−1cap M equals cap P the fraction with numerator r open paren 1 plus r close paren to the n-th power and denominator open paren 1 plus r close paren to the n-th power minus 1 end-fraction automobile loan calculator
: Principal loan amount (Total price minus down payment and trade-in value). : Monthly interest rate (Annual rate divided by 12). : This ratio compares your loan amount to
: Total number of monthly payments (e.g., 60 months for a 5-year loan). : Monthly interest rate (Annual rate divided by 12)
An is a financial tool used to estimate monthly car payments, total interest costs, and the overall price of a vehicle loan. By entering variables such as the car price, down payment, interest rate (APR), and loan term, buyers can compare different financing scenarios to determine what they can truly afford. How to Calculate Your Monthly Payment You can manually calculate your monthly payment ( ) using the standard amortization formula:
: The cost of borrowing. Rates typically range from 4% to 5.5% for excellent credit ( ) but can exceed 9% for poor credit.
For a simpler approach, you can use the formula in Excel , which handles these calculations automatically. Key Components of an Auto Loan