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How do you calculate monthly payments on a car loan?
I’m trying to calculate how much the monthly payments would be if I refinanced my car loan. How do I do that?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You can calculate the monthly payments on your car loan, but you’ll need to calculate the total interest that you’ll pay each month first. To do that, use the following equation:
Monthly interest = (interest rate / 12) x loan balance
Let’s say you have a loan of $10,000 for 72 months with an interest rate of 6%. You can calculate your monthly interest like so: (6% / 12) x 10,000. This comes to $50.
Next, find out how much you’ll pay in principal each month. To do this, divide the principal of your loan by the number of payments you’ll make. Finally, add the two numbers together. The result should be the approximate amount that you’ll pay each month including the APR.
From our example above, we know we divide 10,000 by 72, which equals 138.89. We add this to the monthly interest, and our total comes to $188.89.
If you’d like, you can also just ask the lender how much your monthly payment would be. They’re usually happy to help you learn more about your potential loan contract.
If you do decide to find a new loan, why not refinance with the
Jerry
app? Just download the app to compare quotes from multiple lenders without the hassle of researching and sending documents to potential lenders. Jerry’s app instantly connects you with top companies to help you find a loan that best meets your needs. On average, car owners pay $85 less every month by refinancing their auto loan.MORE: Does refinancing a car hurt your credit score?
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- 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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