1. What is the Auto Loan Payment Formula?

The auto loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by banks including Scotiabank for calculating auto loan payments.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (loan term in months)

Explanation: The formula accounts for both principal repayment and interest charges over the life of the loan.

3. Importance of Loan Calculation

Details: Calculating your monthly payment helps with budgeting and comparing different loan offers. It shows the true cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 5.99), and loan term in months (e.g., 60 for 5 years).

5. Frequently Asked Questions (FAQ)

Q1: Does this include Scotiabank's fees?
A: This calculates base payments only. Additional fees may apply depending on your specific loan agreement.

Q2: How accurate is this calculator?
A: It provides the exact mathematical calculation, but your actual payment may vary slightly due to rounding or specific bank policies.

Q3: Should I put a down payment?
A: A down payment reduces your principal (P), resulting in lower monthly payments and less total interest paid.

Q4: What's better - shorter term or lower rate?
A: Generally, a lower rate saves more money, but shorter terms mean less total interest despite higher payments.

Q5: How does amortization work?
A: Early payments are mostly interest; later payments apply more to principal. This calculator shows the fixed blended payment.