How To Count Car Loan

Compare auto loans

To view loans that fit your choices, enter the loan details you’ve selected.

Estimate your monthly car loan payment

The products listed here, many or all of them, are from our partners, who pay us. This affects the products we write about as well as the location and arrangement of the products on a page. However, this does not influence our evaluations. Our opinions are our own. This is our revenue model and a list of our partners.

Depending on the data you enter, such as the price of the vehicle, the interest rate, the down payment amount, the trade-in value, the length of the loan, the sales tax rate, and the registration fees, you can use this auto loan calculator to estimate the monthly payment and total cost of the loan.

You can adjust the input to see how various factors will impact the amount of your car payment and the total cost of interest.

What you should know about auto financing

It could be beneficial to have a brief understanding of how auto loans operate if you have never financed a car. The majority of people apply for auto loans, typically at banks, credit unions, online lenders, or car dealerships, because they are unable to pay cash for a car or truck. The lender gives you a lump sum of money to pay for the car you’re buying after you’re approved. You take possession of the car and begin monthly loan payments until the balance is paid off.

The monthly and total amount you pay for a car loan depends on a number of factors, some of which you have more control over than others. Use our vehicle loan calculator to experiment with various numbers and make a budget.

How to use the auto loan calculator

The data you can enter into this auto loan calculator is described below, with some fields being mandatory and others optional.

Price of vehicle. Input the price you think you’ll pay for the car. Start with the vehicle’s sticker price (also known as the MSRP) to get an idea of how much a new car will cost. Subtract any savings from dealer negotiations or manufacturer rebates. Then include additional expenses like car options and the “destination fee” that new cars are required to pay.

Estimating the sale price of a used car can be more difficult. The seller’s asking price is where you can begin, but you might be able to bargain for a lower amount. Use online price guides or local online classified ads for similar cars to get a sense of what a fair price is.

Interest rate. There are multiple methods for figuring out what interest rate to enter. Enter the offered rate if you are prequalified or preapproved for a loan. If not, you can use your credit score’s current average interest rate.

This table, which is based on the VantageScore credit scoring model and uses Experian average auto loan APRs by credit score, is a useful reference:

Credit score	Average APR, new car	Average APR, used car
Superprime: 781-850.	5.61%.	7.43%.
Prime: 661-780.	6.88%.	9.33%.
Nonprime: 601-660.	9.29%.	13.53%.
Subprime: 501-600.	11.86%.	18.39%.
Deep subprime: 300-500.	14.17%.	21.18%.
Source: Experian Information Solutions.

It’s important to remember that auto loan interest rates typically rise in tandem with Federal Reserve increases to the federal funds rate. Interest rates on auto loans have now reached their highest point in years as a result of Fed rate increases that started in 2022. Although the rates are more recent, some sources offer average auto loan interest rates that are updated monthly; however, they are not broken down by credit score.

In January 2024, automotive site Edmunds. according to com, the typical auto loan interest rate in December 2023 will be 7. 1% APR for new car loans and 11. 4% APR for used car loans. The volume-weighted average rate was reported as 9 by data company Cox Automotive. 75% for new cars and 14. 13% for used cars in its 1/23/24 Auto Market Report. Cox Automotive rates are sales-weighted averages derived from data obtained from Dealertrack, a car dealership software.

Number of months. Enter the term of the loan, or how long you have to pay it back. Auto loans typically have terms of 24, 36, 48, 60, 72, or 84 months. They are also typically offered in 12-month increments. If at all possible, NerdWallet advises aiming to stay no longer than 60 months. Longer terms will result in a smaller monthly payment, but the total amount of interest paid will be much higher.

Down payment (optional). Enter the total amount of money you want to spend on the vehicle. Although not all lenders require a down payment, NerdWallet advises putting down at least 2020% of the price of a new car or 2010% of the price of a used car. If this amount is out of your price range, contribute as much as you can without depleting your emergency or savings accounts. Any amount put down will help reduce the amount you finance and the loan’s overall cost.

Trade-in value (optional). Enter the trade-in value of your existing vehicle, if any. You can use online sites for appraisals and pricing help. Make sure to check the trade-in value rather than the retail cost (the price at which the dealer sells the car) when using a pricing guide. Additionally, you can obtain cash purchase offers as a starting point from internet merchants like CarMax or Carvana.

Amount owed on trade-in (optional). Enter the remaining amount if you’re still making loan payments for the car you want to trade in here. This is the payback amount, which your lender may supply.

When you’re ready to compare lenders, you can find the best rates on a car loan.

Next steps: Using car loan calculator results

There are numerous ways in which the data obtained from an auto loan calculator can be beneficial.

When comparing loan offers. You are free to bring your own financing from a bank, credit union, or other lender and are not required to accept the loan offered by a dealership or online auto retailer. Apply for preapproved loan offers from multiple lenders, but do so no more than two weeks apart to minimize the effect on your credit score. To compare monthly payments and total loan costs, enter interest rates and terms from the different loan offers into the auto loan calculator. Bring the lowest-rate loan offer with you if you’re buying from a dealership so you can see if the dealer can beat it.

When deciding on a loan term. Lenders and auto dealers frequently extend loan terms to lower monthly car payments. Even though a lower payment might seem ideal, an auto loan calculator can show you the entire cost of a loan with different terms, not just the monthly payment.

As an example, a car buyer considering a $40,000 new car loan with an 84-month term at 9% APR would pay $12,369% in interest over the course of the seven-year loan and have a monthly car payment of approximately $623. The monthly payment would rise to $811 if the term were shortened to 60 months, but the total interest paid would drop to $8,600.

To figure in additional expenses. A lot of the time, when purchasing a car, buyers don’t account for additional expenses like state and local taxes, dealer documentation fees (which can vary greatly), and registration fees. The NerdWallet auto loan calculator lets you record these expenses under Add Advanced Info. You can look up prices online, give your local Bureau of Motor Vehicles a call, or get in touch with a dealership to find out what the going rates are in your area.

how to count car loan

Other NerdWallet auto calculators

Here are some additional car calculators you might want to try, even though this one offers the fundamental data you’ll need to finance and purchase an automobile.

Auto loan affordability calculator. If your monthly budget only permits a specific amount for a car payment, figure out the most you can afford to spend. Our reverse auto loan calculator provides this information too.
Auto loan amortization calculator. Because auto loans use simple interest, the amount of each month’s payment that goes toward interest varies. To find out how much your simple-interest auto loan will cost at any given time during its term, use this calculator.
Auto loan refinancing calculator. If you currently have a car loan, compare the terms of your current loan with a new one to see if you can save any money.

The total amount you’re financing (referred to as principal) and the interest rate you’ll pay on the loan will be disclosed in the lender’s loan offer. Early in a loan, interest will be paid on a larger amount and principal will be paid on a smaller amount each month. You will save money on interest as you reduce the loan balance. This process is called amortization.

The simplest way to calculate an automobile payment is to use an auto loan calculator or an automobile payment calculator, as these tools automatically factor in amortization. But the calculation for a monthly car payment is the same whether you use a calculator or do it by hand.

It is calculated by dividing the total loan amount (interest included) by the loan term, or the number of months you have to repay the loan. For instance, the total interest for a $30,000 loan payable over seven months would be $6,497. 40. So the monthly payment would be $608. 29 ($30,000 + $6,497. 40 ÷ 60 = $552. 50). How is a monthly car payment calculated?.

FAQ

How do you calculate loan value on a car?

To determine the percentage, divide the loan amount by the car’s value, which may be different from the sale price, and multiply the answer by 100. For instance, if you were to take out a $25,000 car loan in order to purchase a $30,000 car, your loan-to-value ratio would be 20%83.

How much is a $20,000 car loan for 5 years?

A $20,000 loan at 5% interest for 5% years or 20,000 months will cost you a total of $22,645 in total. 48, while the identical loan at 3% will set you back $21,562 43.

Read More :

https://www.nerdwallet.com/calculator/auto-loan-calculator
https://www.calculator.net/auto-loan-calculator.html