How to Calculate Your Car Loan Payments

Your lender should provide you with exact details on your car loan payments. Within your contract, you will see the date each payment is due and the amount that is due. Prior to having this contract, though, you can estimate what your car loan payments will be using simple calculations.

  1. Deduct your down payment from the cost of the new vehicle.
  2. If you are trading in a car at the same time, you may be using this as your down payment. Those borrowers trading in a car and placing a cash down payment should subtract the value of their trade in as well.
  3. Remember to add on sales tax to the cost of the vehicle. Some states do not require sales tax on a car, but they may require personal property taxes to be paid on the vehicle. This sum should be added.
  4. Estimate your interest rate. You can ask a lender about going rates and then use your credit score to guess if your rate will be higher or lower. Keep in mind: the length of your loan will affect your interest rate; shorter loans tend to have lower rates.
  5. Estimate your monthly payment by taking the total sum you calculate and dividing it by the number of months on your loan. 
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