Car Loan Monthly Payment Formula

Some loan calculators allow you to check how increasing your monthly payment affects how fast you can pay your loan off.

Car loan monthly payment formula. However if you know your principal length of loan and annual percentage rate you may use this formula. To calculate your monthly payment you need to know your loan term the interest rate and the amount you borrowed. C monthly payment. Share pin email richard goergphotographers choice rfgetty images by.

You want to calculate monthly payments not annual payments so youll need the total number of months throughout the life of the loan. These variables help you plan ways to reduce your debt. Estimate the size of your monthly payment while you are shopping for a car by using a simple rule of thumb. It is important to keep the rate per period and number of periods consistent with one another in the formula.

To calculate the monthly payment on an auto loan use this car payment formula. If you plan on a 60 month loan at 6 percent you will pay about 20 per month per 1000 that you borrow. If you make the loan for only 3 years your monthly payments will be about 30 per 1000 borrowed. For instance you can use excel to calculate car loan transactions and payment amounts as well as the total interest paid over the life of a loan.

In addition you can use excel to compare multiple scenarios in order to make sound financial decisions. The pv or present value portion of the loan payment formula uses the original loan amount. Monthly payment for 5 year auto loan with a principal of. Technically you can use car loan payment calculators on any of your loans.

For example if the loan is for four years then the number of months is 4 12 or 48. P principal amount on the loan. The balance loans calculate loan payments and costs. This loan payment formula may be used only for standard loans.

If the loan payments are made monthly then the rate per. He covers banking and loans and has nearly two decades of experience writing about personal. Justin pritchard cfp is a fee only advisor in colorado. The original loan amount is essentially the present value of the future payments on the loan much like the present value of an annuity.

Heres how to calculate a car loan in excel before you make a commitment. 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. 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. Formulas and tools free calculators show how debt works.

Knowing how much you will pay each month will help. N total of months for the loan years on the loan x 12 example. As long as you know your loan factors the calculator will work.