Find Out How Much Your Next Car Will Really Cost
How Is This Calculated?
Calculation Method
This calculator uses the standard amortized loan formula to determine your monthly payment. The calculation takes into account the principal amount (vehicle price minus down payment and trade-in, plus sales tax), the annual interest rate, and the loan term in months.
Monthly Payment Formula
M = P × [r(1+r)^n] / [(1+r)^n - 1]Where:
- M = Monthly Payment
- P = Principal Loan Amount (Amount Financed)
- r = Monthly Interest Rate (Annual Rate / 12 / 100)
- n = Number of Months (Loan Term)
Calculation Steps Calculate sales tax amount and add to vehicle price
Subtract down payment and trade-in value to get principal
Convert annual interest rate to monthly rate (APR / 12 / 100)
Apply the amortization formula to calculate monthly payment
Multiply monthly payment by loan term to get total loan amount
Calculate total interest by subtracting principal from total loan amount
References:
- Standard amortization formula used by financial institutions
- Based on compound interest calculation principles
- Compliant with Truth in Lending Act (TILA) disclosure requirements
Note: This calculator provides estimates for planning purposes. Actual loan terms, interest rates, and monthly payments may vary based on your credit score, lender policies, and additional fees not included in this calculation.