How can I calculate my car loan monthly payments?

I’m trying to take out a car loan and want a good idea of my monthly payments. What’s the best way for me to calculate my monthly car loan payments before I actually take out a loan?

Answer
Buying a car can be expensive, so it’s good you’re reviewing the costs now! Calculating your car loan monthly payments is an easy process. But you’ll need to know your total loan balance, interest rate, and term. With them, you can follow these steps to calculate your monthly payments.
  • First, divide your interest rate by 100.
  • Next, multiply your interest rate by your total balance.
  • Add the answer from the last step to your total balance.
  • Divide the interest and total balance by the number of months in your loan term.
To make that easier to understand, let’s say you take out a loan for $20,000 with 5% interest and a 12-month term. You can calculate your monthly payments by:
  • Dividing 5% by 100 to get 0.05,
  • multiplying 0.05 by $20,000 to get $1,000,
  • adding $1,000 and $20,000 to get $21,000, and
  • dividing $21,000 by 12 months to get $1,750 a month.
Hopefully, these steps will help you calculate your monthly car loan payments!
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Joshua Levy
Answered on Dec 08, 2021
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