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 ÷ 12)
• \( n \) — Number of monthly payments (loan term in months)
• \( PMT \) — Monthly payment amount (CAD)

Explanation: The formula accounts for both principal and interest payments, with more interest paid earlier in the loan term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan fits your financial situation before committing to a vehicle purchase.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), annual interest rate (as quoted by lender), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical auto loan term in Ontario?
A: Most auto loans in Ontario range from 36 to 84 months (3-7 years), with 60 months being very common.

Q2: What interest rates can I expect in Ontario?
A: Rates vary (typically 3%-10%) based on credit score, loan term, and whether financing through dealer or bank.

Q3: Does this include Ontario sales tax?
A: No, ensure your principal amount already includes 13% HST (Ontario sales tax) on the vehicle price.

Q4: Are there other fees not included?
A: This calculates principal+interest only. Additional costs may include insurance, registration, and dealer fees.

Q5: Can I calculate bi-weekly payments?
A: For bi-weekly, divide monthly by 2 (but confirm with lender as some calculate differently).