Auto Loan Payment Formula:
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The auto loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term. Scotiabank Bank uses this standard formula to determine monthly payments based on loan amount, interest rate, and term length.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for both principal and interest payments over the life of the loan, with payments remaining constant but the proportion of principal to interest changing over time.
Details: Calculating your monthly payment helps with budgeting and ensures the loan fits within your financial situation before committing to a vehicle purchase.
Tips: Enter the total loan amount (after any down payment), Scotiabank's current annual interest rate, and the loan term in months. All values must be positive numbers.
Q1: Does this include taxes and fees?
A: No, this calculates principal and interest only. Additional costs like sales tax, registration, or loan fees would increase your total payment.
Q2: How does a larger down payment affect my payment?
A: A larger down payment reduces the principal (P), resulting in a lower monthly payment.
Q3: What's better - shorter term with higher payments or longer term with lower payments?
A: Shorter terms mean less total interest paid but higher monthly payments. Choose based on your monthly budget and total cost preferences.
Q4: Does Scotiabank offer different rates for different loan terms?
A: Yes, typically shorter terms have lower interest rates than longer terms.
Q5: Can I pay extra to pay off my loan early?
A: Most Scotiabank auto loans allow extra payments, but check for any prepayment penalties.