The formula for calculating interest payment is given below. The car loan interest rate is calculated based on the interest rate and the remaining balance. Hence, $283.07 is the amount that borrowers pay each month until the car loan is paid off in 5 years. Let's calculate the monthly payment for a car loan of $15,000 with a 5% interest rate and a 5-year term. Monthly Payment = (P x i) / (1 - 1 / (1 + i)^ n), where To calculate monthly car payments, we need to use the formula below. For example, the following chart shows two loans of $20,000, one with an interest rate of 4.5% and a 5-year term (Loan 1), the other with an interest rate of 5.15% and a 7-year term (Loan 2).Īlthough the monthly payment is lower for Loan 2 ($284.09 per month), the overall costs are much higher with a total interest of $3,863.56 which is $1,491.94 more than Loan 1. These 3 variables determine the monthly payment and the total interest payment over the course of the loan.Ī lower monthly payment doesn't mean a borrower would save money if their term is longer. Term - the number of years that it takes the borrower to repay the loan Interest rate - the interest payment is based on the interest rate you get getting Borrowers with good credit scores will get the most competitive rates from lenders. There are three variables that every borrower should be aware of before applying for an auto loan, the loan amount, interest rate, and the term. Most car loans are secured using the car as collateral meaning if a borrower defaults on the loan, the lender would take his car. When a borrower takes out a loan, he gets a lump sum payment from the lender and he needs to pay it back over time with interest. The car loan amortization schedule with extra payments gives borrowers the options to see how much they can save by making extra payments toward the principal of their car loan, and how much faster they can pay off the auto loan compared to the default payment schedule.Ī car loan is a loan that is used to finance the purchase of a car. The auto loan calculator is able to calculate any type of auto loan and generate an auto loan amortization schedule with principal, interest, and balance for each payment.Ĭar Loan Amortization Schedule With Extra Payments
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