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 refunds that reduce the principal amount.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

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

3. Importance of Loan Payment Calculation

Details: Accurate payment calculation helps borrowers understand affordability, compare loan offers, and budget for their vehicle purchase.

4. Using the Calculator

Tips: Enter the total loan amount, any rebates (set to 0 if none), annual interest rate (as a percentage), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do rebates affect my monthly payment?
A: Rebates reduce the principal amount, which directly lowers your monthly payment or allows you to borrow less.

Q2: Should I take a rebate or low-interest financing?
A: This depends on the amounts - use this calculator to compare both options by changing the rebate and interest rate values.

Q3: Are there other costs not included in this calculation?
A: Yes, this doesn't include taxes, fees, insurance, or potential prepayment penalties. It calculates principal and interest only.

Q4: Why is my actual payment slightly different?
A: Lenders may use slightly different rounding methods or include other fees. This calculator provides an estimate.

Q5: How does loan term affect total interest paid?
A: Longer terms mean lower monthly payments but significantly more total interest paid over the life of the loan.