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Auto Loan Calculator Capital One

Auto Loan Payment Formula:

\[ PMT = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

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1. What is the Auto Loan Payment Formula?

The auto loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified period. It accounts for the principal amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the auto loan payment formula:

\[ PMT = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

Explanation: The formula calculates the fixed payment that pays off the loan with interest over the specified term.

3. Importance of Auto Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers. It shows how much car you can afford based on your budget.

4. Using the Calculator

Tips: Enter the loan amount in USD, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate by 12 (months) and by 100 (to convert from percentage to decimal).

Q2: Does this include taxes and fees?
A: No, this calculates principal and interest only. Additional costs may apply.

Q3: What's a typical auto loan term?
A: Common terms are 36, 48, 60, or 72 months. Longer terms mean lower payments but more interest paid overall.

Q4: How does down payment affect the calculation?
A: Down payment reduces the principal amount (P) in the formula.

Q5: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan (mortgages, personal loans, etc.).

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