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 standard loan payment formula:

Where:

• \( PMT \) — Monthly payment amount
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (loan term in months)

Explanation: The formula calculates the fixed payment that covers both principal and interest each month, ensuring the loan is paid off by the end of the term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers. It shows how interest rates and loan terms affect your payment amount.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), annual interest rate as a decimal (e.g., 0.05 for 5%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I enter the APR or interest rate?
A: Enter the base interest rate (not APR) for this calculation. APR includes fees which this calculator doesn't account for.

Q2: 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.

Q3: Are dealer loans different from bank loans?
A: The calculation is the same, but dealer financing may have different rates, terms, or incentives compared to bank loans.

Q4: Does this include taxes and fees?
A: No, this calculates principal and interest only. Your actual payment may be higher with taxes, registration, and other fees.

Q5: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. For variable-rate loans, payments may change over time.