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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. It accounts for the principal amount, interest rate, and loan duration to determine the regular payment amount.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula calculates the fixed payment that covers both principal and interest over the loan term, with more interest paid early in the loan and more principal paid later.
Details: Understanding your monthly payment helps budget for a car purchase, compare loan offers, and determine an affordable vehicle price range based on your financial situation.
Tips: Enter the total loan amount in CAD, the annual interest rate (without % sign), and the loan term in years. All values must be positive numbers.
Q1: Does this include taxes and fees?
A: No, this calculates only the principal and interest payment. Additional costs like sales tax, registration, or documentation fees would increase your total monthly costs.
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 interest costs.
Q3: Are Canadian car loan rates different?
A: Canadian rates may differ from other countries due to market conditions and Bank of Canada policies. Always check current rates from lenders.
Q4: What's a good interest rate for a car loan?
A: Rates vary by credit score, lender, and market conditions. As of 2023, rates typically range from 3% to 8% for borrowers with good credit.
Q5: Can I calculate bi-weekly payments?
A: Yes, divide the annual rate by 26 (instead of 12) and multiply the term by 26 to calculate bi-weekly payments.