Car Loan Calculator With Trade-In And Interest Rate

Car Loan Payment Formula:

\[ PMT = (price + tax + fees - D - trade\_value + owed\_on\_trade) \times \frac{r (1 + r)^n}{(1 + r)^n - 1} \]

Vehicle Price:

Tax:

Fees:

Down Payment:

Trade-In Value:

Amount Owed on Trade:

Interest Rate:

decimal

Loan Term (months):

months

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

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1. What is the Car Loan Payment Formula?

The car loan payment formula calculates the fixed monthly payment required to pay off a car loan over a specified term, accounting for the principal amount, interest rate, and any trade-in considerations.

2. How Does the Calculator Work?

The calculator uses the car loan payment formula:

\[ PMT = (price + tax + fees - D - trade\_value + owed\_on\_trade) \times \frac{r (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( price \) — Vehicle purchase price
\( tax \) — Sales tax amount
\( fees \) — Additional fees
\( D \) — Down payment amount
\( trade\_value \) — Value of trade-in vehicle
\( owed\_on\_trade \) — Amount still owed on trade-in
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment needed to amortize the loan over the specified term.

3. Importance of Accurate Loan Calculation

Details: Understanding your exact monthly payment helps with budgeting and ensures you don't overextend yourself financially when purchasing a vehicle.

4. Using the Calculator

Tips: Enter all currency values in dollars without commas. Interest rate should be entered as a decimal (e.g., 0.05 for 5%). Loan term is in months (e.g., 60 for 5 years).

5. Frequently Asked Questions (FAQ)

Q1: How is the interest rate converted to monthly?
A: The calculator uses the monthly rate directly. Divide your annual rate by 12 to get the monthly rate (e.g., 6% annual = 0.005 monthly).

Q2: Why include trade-in value and amount owed?
A: These affect your loan amount - positive equity (trade value > owed) reduces your loan, negative equity (owed > trade value) increases it.

Q3: What fees should be included?
A: Include all fees that will be financed: documentation fees, title/registration, dealer fees, etc.

Q4: How accurate is this calculator?
A: It provides the exact mathematical payment. Actual payments may vary slightly due to rounding or lender-specific practices.

Q5: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan when you know the principal, rate, and term.