Bankrate Auto Loan Calculator With Rebate And Credit

Auto Loan Payment Formula:

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

Loan Amount (P):

Rebate Amount:

Interest Rate:

Loan Term:

months

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

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, accounting for any rebates or credits applied to the principal.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

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

Where:

\( PMT \) — Monthly payment amount
\( P \) — Principal loan amount
\( \text{rebate} \) — Manufacturer or dealer rebate applied to principal
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of monthly payments (loan term in months)

Explanation: The formula accounts for the time value of money, calculating equal payments that pay off both principal and interest over the loan term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers. Rebates can significantly reduce your monthly payment by lowering the effective loan amount.

4. Using the Calculator

Tips: Enter the total loan amount before rebates, any rebate amount (if applicable), annual interest rate, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do rebates affect my loan payment?
A: Rebates applied to the principal reduce the amount you're financing, which lowers your monthly payment and total interest paid.

Q2: Should I take a rebate or low-interest financing?
A: This depends on the amounts involved. Use this calculator to compare both options - sometimes the rebate offers better value.

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 total interest.

Q4: Does this include taxes and fees?
A: No, this calculates principal and interest only. You may need to add taxes, registration, and other fees to your total cost.

Q5: How accurate is this calculator?
A: It provides precise calculations based on the inputs, but actual loan offers may include additional factors like credit score adjustments.