Calculate Monthly Auto Loan Payment

Auto Loan Payment Formula:

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

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. It accounts for the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the auto loan payment formula:

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

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 will pay off the loan with interest by the end of the term.

3. Importance of Loan Payment Calculation

Details: Knowing your exact monthly payment helps with budgeting and comparing different loan offers to find the most affordable option.

4. Using the Calculator

Tips: Enter the total loan amount, annual interest rate (APR), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and fees?
A: No, this calculates only the principal and interest portion. Additional costs like sales tax, registration, or dealer fees are not included.

Q2: What's a typical auto loan term?
A: Common terms are 36, 48, 60, or 72 months. Longer terms mean lower payments but more interest paid overall.

Q3: How does down payment affect the calculation?
A: Subtract your down payment from the car price before entering the loan amount (P) in the calculator.

Q4: What's considered a good auto loan rate?
A: Rates vary by credit score, but generally under 5% is excellent for new cars, under 7% for used cars (as of 2023).

Q5: Can I calculate total interest paid?
A: Yes, multiply the monthly payment by the term, then subtract the principal: Total Interest = (PMT × n) - P