How do I find the finance charge on a car loan?

I’m a penny-pincher, and I want to make sure I can afford my car loan. I’ve read over car loan terms and example contracts, so I know quite a bit, but I’m still unsure of one thing. How do I calculate the finance charge on a car loan?

Answer
Finance charges include the total interest, fees, and other charges paid over the life of the car loan. At its simplest, add together all the interest, fees, and charges and subtract them from the total amount borrowed to find your finance charge.
A more in-depth way of finding the finance charge on a car loan is to multiply the monthly payment by the number of months in the loan. Then, subtract this amount from the principal.
For example, let’s say you got a car loan that has 60 monthly payments of $479, but your total principal is $31,000. To get your finance charges:
  • 60 x $479 = $28,740
  • $31,000 - $28,740 = $2,260
  • Finance charges = $2,260
Unless you find a 0% interest loan or pay cash for the car, you’ll always have to pay some money toward finance charges. The key is to shop around to find the best APR possible.
To reduce your overall expenses even further, make sure to use the Jerry app to search for your next car insurance policy. As a licensed broker, Jerry helps you find and compare quotes from over 50 top providers, including Nationwide, Allstate, and Travelers. When you find a great rate for your new car, Jerry can help you buy your new coverage and even cancel your old policy!
Jack Walsh
Answered on Dec 08, 2021
Jack is an insurance specialist and writer living in Buffalo, New York. He has a BA from Union College and worked as an insurance agent with Jerry before joining our content team. He enjoys using data and research to break down complex subjects and convey a story. In his spare time, Jack enjoys cycling, cooking, and exploring Buffalo’s beautiful waterfront.
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