How do you compute car loan interest?
I need to compute my car loan interest rate so that I can compare the loan to other options more accurately. How do I do that?
Car loan interest rates can be a little confusing, but you can compute your car loan interest rate using the following formula: (loan interest rate / 100) x loan principal = interest rate
If you’re not sure about any of those values, you can find them on your loan contract, or you can ask your lender. Your lender is legally required to disclose this information to you!
If you’d rather, you can also compute the APR in Microsoft Excel. You’ll just need to know the monthly payment amount, the loan term, and the value of your loan before fees.
If you don’t know your monthly payment amount, that’s okay! You can calculate it by typing in this formula: =PMT(interest rate as a decimal/12, number of months in the loan term, loan amount, with fees)
The result should be a negative number. You’ll use this number in the equation to calculate your APR, which is: =RATE(number of months in loan term, estimated monthly payment as a negative number, value of loan minus fees)*12
The result should be your approximate interest rate, which you can use to compare your current loan to others that are available to you.
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.
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