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How do you calculate the interest rate on a car loan?
I’m looking to take out a car loan. I’ve got a few quotes already but they aren’t super clear on what I’ll actually be paying in interest. How can I tell how much I’ll end up paying in interest on my car loan?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
To calculate the interest on a car loan, divide the interest rate by the number of payments you’re required to make. Multiply that number by the balance of your loan (i.e., the total amount). The answer will reflect how much of your monthly payment goes to interest.
You might find that this number is much larger than you anticipated. If this is the case, after several payments, you have the ability to refinance the loan. Refinancing is a great way to save money on your car loan’s interest rate.
Finding the right lender can be a huge pain that might end up costing you time and money. But
Jerry
removes the hassle by giving you one app that instantly connects you with top companies to meet your financial needs. Make sure you’re not overpaying for your car loan by comparing offers from multiple lenders to find the best option for you.MORE: What is APR and how is it calculated?
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- Gregory R.
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