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, ensuring the loan is paid off by the end of the term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan terms fit your financial situation before committing to a car purchase.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), the annual interest rate offered by TD Canada, and the loan term in months (typically 24-84 months for car loans).

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and fees?
A: No, this calculates only the principal and interest portion. Additional costs like sales tax, registration, or dealer fees would increase your total costs.

Q2: How does the loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total costs.

Q3: What's a typical interest rate from TD Canada?
A: Rates vary based on credit score, loan term, and vehicle age. As of 2023, rates typically range from 3.99% to 8.99% for new cars.

Q4: Can I make extra payments?
A: Most TD auto loans allow extra payments, which reduce principal and can shorten your loan term. Check your specific terms for prepayment options.

Q5: How accurate is this calculator?
A: This provides a close estimate, but actual loan terms may vary based on your credit profile and TD's current lending policies.