1. What is the Car Loan Payment Formula?

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.

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)
• \( n \) — Number of monthly payments (loan term in months)

Explanation: The formula calculates the fixed payment that covers both principal and interest each month, resulting in the loan being paid off exactly at the end of the term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan offers.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (without % sign), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical car loan term in Alberta?
A: Most car loans in Alberta range from 36 to 84 months (3 to 7 years), with 60 months being common.

Q2: What interest rates can I expect in Alberta?
A: Rates vary but typically range from 3% to 8% for new cars and 5% to 15% for used cars, depending on credit score.

Q3: Are there additional costs in Alberta?
A: Yes, remember to account for Alberta's 5% GST, insurance, registration, and potentially other fees.

Q4: Should I make a down payment?
A: A down payment of at least 20% is recommended to avoid being "upside down" on your loan (owing more than the car's value).

Q5: Can I pay off my loan early in Alberta?
A: Most lenders allow early repayment, but check for prepayment penalties which are limited by Alberta law to 3 months' interest.