Auto Loan Calculator
Estimate your monthly car payment, total interest, and the full cost of the vehicle loan.
How Auto Loan Payments Are Calculated (Amortization)
An auto loan calculation uses the standard **Amortization Formula** to determine the fixed monthly payment. This payment remains constant over the loan term, but the portion of the payment that goes toward interest decreases over time, while the portion going toward the principal increases.
The Monthly Payment Formula:
The formula used to calculate the monthly payment ($M$) is: $$ M = P \frac{i(1+i)^n}{(1+i)^n - 1} $$ Where:
- $P$ is the **Principal** Loan Amount.
- $i$ is the **Monthly Interest Rate** ($\frac{\text{APR}}{12}$).
- $n$ is the **Total Number of Payments** ($\text{Loan Term in Years} \times 12$).
Understanding Total Cost:
The **Total Loan Cost** is the sum of the original loan amount (principal) plus the total interest paid. Note that the total cost of the vehicle is the sum of the Down Payment, plus the Total Loan Cost.