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Auto Loan Payment Formula:
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This calculator determines the monthly payment for a 12-year (144-month) auto loan based on the loan amount and annual interest rate. It helps borrowers understand their payment obligations before committing to a long-term auto loan.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for both principal repayment and interest charges over the life of the loan.
Details: A 144-month auto loan spreads payments over 12 years, resulting in lower monthly payments but higher total interest compared to shorter-term loans. This calculator helps visualize the long-term cost of extended auto financing.
Tips: Enter the total loan amount and annual interest rate. The calculator will show your estimated monthly payment, total repayment amount, and total interest paid over the 144-month term.
Q1: Why choose a 144-month auto loan?
A: This extended term offers lower monthly payments but results in significantly higher total interest costs. It may be appropriate for buyers who need to minimize monthly expenses.
Q2: What's the downside of a 12-year auto loan?
A: You'll pay more interest overall, and you may owe more than the car's value for most of the loan term (negative equity).
Q3: How does interest rate affect payments?
A: Higher rates increase both monthly payments and total interest. A 1% rate difference can add thousands in interest over 144 months.
Q4: Should I make a down payment?
A: Yes, a down payment reduces the principal amount borrowed, lowering both monthly payments and total interest.
Q5: Are there prepayment penalties?
A: Some lenders charge fees for early repayment. Check your loan terms if you plan to pay off the loan early.