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

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( PMT \) — Monthly payment (CAD)
• \( P \) — Principal loan amount (CAD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (years × 12)

Explanation: The formula accounts for compound interest over the life of the loan, spreading payments equally across all months.

3. Importance of Loan Payment Calculation

Details: Calculating your exact monthly payment helps with budgeting and comparing different loan offers. In Ontario and Quebec, this is particularly important due to varying insurance and tax regulations.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), annual interest rate (APR), loan term in years, and select your province. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's different about car loans in Ontario vs Quebec?
A: Quebec has different tax structures and consumer protection laws that may affect total loan costs compared to Ontario.

Q2: Does this include taxes and insurance?
A: No, this calculates principal and interest only. You'll need to add provincial sales tax, insurance, and registration separately.

Q3: What's a typical interest rate for car loans?
A: Rates vary (typically 3%-8% for new cars, higher for used), depending on credit score, lender, and market conditions.

Q4: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid over the life of the loan.

Q5: Are there prepayment penalties in Ontario/Quebec?
A: Some lenders charge prepayment penalties - check your loan agreement as regulations differ between provinces.