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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?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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