If you'd like to calculate auto loan payments to make sure you're getting fair car loan rates on your used car loans, this guide will help you do so. You will need to know your auto loan terms: the amount of the loan, the period of time which you have to pay off your loan, and your interest rate. You can plug these numbers into an online auto loan calculator, or use the steps below to manually calculate your auto loan payments.
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Step 1 - Calculate Total Interest
For this step, you will need the term of your loan in years and your interest rate. Convert your interest rate to decimal form - for example, 5% interest becomes .05. Multiply the decimal by the number of years over which you are paying back the loan. If you are paying back a loan over 5 years, you would multiply 5 by .05 to get .25. Add 1 to this number and multiply the result (in this case, 1.25) by the total amount of your loan. The number you come up with is the total amount of money you will pay over the course of your loan repayment.
Step 2 - Divide Payment by Time
For this step, you will need the term of your loan in months and the total amount you will be repaying which you calculated in step 1. Divide the amount of your repayment by the number of months you have to repay it. This number is approximately what your monthly payments should be.
It's worth noting that this method of calculation is only a close approximation of what your monthly payments will be. Banks use a much more complex model, so to get a precise calculation, turn to a bank or an online loan calculator. If you don't have quick access to either, though, these easy two steps will give you a reasonably accurate estimation.
