Car Loan Monthly Payment Formula

N total of months for the loan years on the loan x 12 example.

Car loan monthly payment formula. In addition you can use excel to compare multiple scenarios in order to make sound financial decisions. The original loan amount is essentially the present value of the future payments on the loan much like the present value of an annuity. For example if the loan is for four years then the number of months is 4 12 or 48. Heres how to calculate a car loan in excel before you make a commitment.

You want to calculate monthly payments not annual payments so youll need the total number of months throughout the life of the loan. To calculate your monthly payment you need to know your loan term the interest rate and the amount you borrowed. This loan payment formula may be used only for standard loans. If the loan payments are made monthly then the rate per.

Buying a car often requires taking out a loan to finance a portion of the costs. The longer your loan the smaller your monthly payment will be but the larger the total amount of interest you will pay over the life of the loan. Knowing how much you will pay each month will help. R monthly interest rate in decimal form yearly interest rate100 12.

These variables help you plan ways to reduce your debt. The balance loans calculate loan payments and costs. He covers banking and loans and has nearly two decades of experience writing about personal. If you plan on a 60 month loan at 6 percent you will pay about 20 per month per 1000 that you borrow.

Technically you can use car loan payment calculators on any of your loans. To calculate the monthly payment on an auto loan use this car payment formula. There are special types of loans issued by banks or private lenders that may use their own methods and formulas such as loans with the entire principals due at the end in balloon payments. C monthly payment.

Estimate the size of your monthly payment while you are shopping for a car by using a simple rule of thumb. If you make the loan for only 3 years your monthly payments will be about 30 per 1000 borrowed. Share pin email richard goergphotographers choice rfgetty images by. Some loan calculators allow you to check how increasing your monthly payment affects how fast you can pay your loan off.

Monthly payment for 5 year auto loan with a principal of. P principal amount on the loan. Justin pritchard cfp is a fee only advisor in colorado. However if you know your principal length of loan and annual percentage rate you may use this formula.

The pv or present value portion of the loan payment formula uses the original loan amount. It is important to keep the rate per period and number of periods consistent with one another in the formula. Again these estimates do not factor in your up front costs.