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Auto Loan Payment Formula:
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The auto loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term, including the principal amount and sales tax. This is particularly important in Florida where sales tax is added to the purchase price.
The calculator uses the auto loan payment formula:
Where:
Explanation: The formula accounts for both the principal and taxes in the loan amount, then calculates the fixed payment needed to pay off the loan with interest over the term.
Details: Accurate loan calculations help buyers understand their true monthly obligations and compare different loan offers effectively, especially important in Florida where sales tax rates can vary by county.
Tips: Enter the vehicle price before taxes as principal, your local sales tax amount, the annual interest rate offered by your lender, and the loan term in months. Florida's state sales tax is 6% plus possible local county taxes.
Q1: Why include taxes in the loan calculation?
A: In Florida, most dealers include sales tax in the financed amount, so it's important to factor this into your payment calculations.
Q2: What is Florida's sales tax rate for vehicles?
A: Florida has a 6% state sales tax plus discretionary county taxes (0-1.5%), making the total rate typically 6-7.5%.
Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.
Q4: Are there other fees to consider?
A: Florida also charges registration fees ($225-$450) and title fees ($77.25), but these are typically paid separately from the loan.
Q5: Should I put money down?
A: A down payment reduces the principal amount financed, which lowers both your monthly payments and total interest costs.