Edmunds Com Auto Loan Calculator

How to Use This Calculator

To calculate your auto loan payments:

1. Enter the loan amount (the price of the car you want to purchase)
2. Select the loan term (how many years you want to pay off the loan)
3. Enter your estimated annual interest rate (APR)
4. Enter your down payment amount (if any)
5. Click "Calculate" to see your estimated monthly payment

The calculator will show you your estimated monthly payment, total interest paid over the life of the loan, and the total amount paid.

Formula Used

The auto loan calculator uses the standard loan payment formula:

Where:

• M = Monthly payment
• P = Principal loan amount (car price minus down payment)
• i = Monthly interest rate (annual rate divided by 12)
• n = Number of payments (loan term in years multiplied by 12)

This formula calculates the fixed monthly payment for a loan with a constant interest rate.

Worked Example

Let's calculate a loan for a $25,000 car with a 4.5% APR over 5 years with a $5,000 down payment.

1. Principal (P) = $25,000 - $5,000 = $20,000
2. Annual interest rate = 4.5% = 0.045
3. Monthly interest rate (i) = 0.045 / 12 ≈ 0.00379
4. Number of payments (n) = 5 years × 12 = 60
5. Plugging into the formula:
   M = $20,000 [ 0.00379(1 + 0.00379)^60 ] / [ (1 + 0.00379)^60 - 1 ]
6. Calculating gives M ≈ $376.50 per month

Total interest paid over 5 years would be approximately $1,800.

Understanding Your Results

When you get your results, pay attention to:

• The monthly payment amount - this is what you'll pay each month
• The total interest paid - this shows how much extra you'll pay beyond the car's price
• The total amount paid - the sum of your principal and interest payments

You can use this information to compare different loan options and make an informed decision.