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How do I calculate accrued interest on a car loan?
I always like to know where my money is going. I’m shopping around for a car loan, but I don’t want to pay too much interest. Is there a way to calculate accrued interest on a car loan so I know exactly what I’m paying?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Knowing where your money is going is one of the principles of exemplary personal finance, so way to go on that! If you want to know what the accrued interest of a
car loan
is, use an online car loan calculator, an accrued interest calculator, or an amortization schedule.While you could make calculations to determine this, the math can get more complicated than you’re ready for. It’s not a simple interest calculation, as your balance fluctuates as you pay down the loan. If you wanted to do the calculations by hand, you need to:
- Get a monthly interest rate by dividing your interest rate by 12.
- Then, determine the average daily balance of the loan by adding up the principal on each day of the month and dividing it by the number of days in the month.
- Multiply the monthly interest rate by the average daily balance to get your monthly interest payment.
- Multiply this by the number of months in the loan.
Don’t forget to budget for car insurance. When you finance a vehicle, lenders will require you to have full coverage car insurance to protect their asset. To help you find the best rates, try using the number-one-rated car insurance app,
Jerry
. Jerry compares personalized rates from more than 50 top providers, including Nationwide, Allstate, and Travelers, and delivers the best deals to your phone in minutes for free. View full answer
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