Calculating Car Loan Payments: Formula and Example

Searching calculating car loan payments means you want to estimate the monthly payment for an auto loan.

Car Loan Payment Formula

M = P[r(1+r)^n] / [(1+r)^n - 1]

Where:

• M = monthly payment
• P = loan principal
• r = monthly interest rate
• n = number of monthly payments

Example

Suppose:

• Loan amount: $25,000
• APR: 6%
• Term: 60 months

Monthly rate:

0.06 / 12 = 0.005

Using the formula, the monthly payment is about $483.

The Bottom Line

To calculate car loan payments, use the loan amount, APR, and term in months. Down payment, taxes, and fees can all affect the financed amount.

Use the Car Loan Calculator for a faster estimate.

How to Calculate: Step-by-Step Guide

1

Find loan principal

Start with car price minus down payment and trade-in, plus fees if financed.

2

Convert annual rate to monthly

Divide the APR by 12 to get the monthly rate.

3

Apply the loan payment formula

Use the amortized payment formula with principal, monthly rate, and number of months.