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 term. This is the standard formula used by lenders in Ontario, Canada.

2. How Does the Calculator Work?

The calculator uses the auto loan payment formula:

Where:

• \( P \) — Principal loan amount (CAD)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (CAD)

Explanation: The formula accounts for both principal and interest payments over the loan term, with each payment containing a portion that goes toward both.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan offers.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate as a percentage (e.g., 5.99 for 5.99%), and loan term in months (typically 24-84 months for auto loans).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical auto loan interest rate in Ontario?
A: Rates vary but typically range from 3.99% to 19.99% depending on credit score, loan term, and vehicle age.

Q2: Are there additional costs not included in this calculation?
A: Yes, Ontario has 13% HST on vehicle purchases, plus potential dealer fees, licensing, and insurance costs.

Q3: What's the maximum auto loan term in Ontario?
A: Typically up to 8 years (96 months) for new cars, shorter for used vehicles.

Q4: Does this calculator account for down payments?
A: No, enter the principal amount after any down payment or trade-in value.

Q5: Are there prepayment penalties in Ontario?
A: Some lenders charge penalties for early repayment. Check your loan agreement.