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Car Loan Payment Formula:
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The car loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term, including the principal amount, California sales tax, minus any down payment, at a given interest rate.
The calculator uses the car loan payment formula:
Where:
Explanation: The formula accounts for the total financed amount (price + tax - down payment) and calculates the fixed payment needed to amortize the loan over the term.
Details: Calculating your exact monthly payment helps with budgeting and ensures you can comfortably afford the vehicle. It also allows you to compare different loan offers effectively.
Tips: Enter the vehicle price, California sales tax amount (typically 7.25-10.25%), your down payment, annual interest rate divided by 12 (for monthly rate), and loan term in months.
Q1: What is California's sales tax rate for vehicles?
A: California's base rate is 7.25%, but local taxes can increase this to 7.75-10.25% depending on the county.
Q2: How does down payment affect my monthly payment?
A: Larger down payments reduce the financed amount, resulting in lower monthly payments and less total interest paid.
Q3: Should I choose a shorter or longer loan term?
A: Shorter terms have higher monthly payments but lower total interest. Longer terms reduce monthly payments but increase total interest costs.
Q4: How do I convert APR to monthly rate?
A: Divide your annual percentage rate (APR) by 12 (months) and then by 100 to convert to decimal (e.g., 6% APR = 0.06/12 = 0.005).
Q5: Are there other fees not included in this calculation?
A: Yes, this doesn't include registration fees, documentation fees, or optional products like extended warranties which may be financed.