Bankrate Loan Calculator Auto
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Reviewed by Calculator Editorial Team
Use our Bankrate Loan Calculator Auto to estimate your monthly auto loan payments, total interest paid, and loan comparison. This calculator helps you understand the cost of financing a new or used vehicle by considering the loan amount, interest rate, and loan term.
How to Use This Calculator
To use the Bankrate Loan Calculator Auto, follow these simple steps:
- Enter the loan amount you're considering. This is typically the price of the vehicle minus any down payment.
- Input the annual percentage rate (APR) offered by the lender. This is the total cost of borrowing expressed as a yearly rate.
- Select the loan term in years. Common terms range from 3 to 7 years.
- Click the "Calculate" button to see your estimated monthly payment, total interest paid, and total cost of the loan.
- Review the results and compare different loan options to make an informed decision.
This calculator provides an estimate based on the information you provide. Actual loan terms and payments may vary depending on the lender and your specific financial situation.
Formula Used
The Bankrate Loan Calculator Auto uses the standard auto loan payment formula to calculate your monthly payments:
Auto Loan Payment Formula
Monthly Payment = P × [r(1 + r)^n] / [(1 + r)^n - 1]
Where:
- P = Principal loan amount
- r = Monthly interest rate (APR divided by 12)
- n = Number of payments (loan term in years × 12)
This formula calculates the fixed monthly payment for a loan with a constant interest rate. The calculator also computes the total interest paid and the total cost of the loan by multiplying the monthly payment by the number of payments and subtracting the principal.
Worked Example
Let's walk through an example to see how the Bankrate Loan Calculator Auto works. Suppose you're considering a $25,000 auto loan with a 4.5% APR and a 5-year term.
- Enter $25,000 as the loan amount.
- Input 4.5% as the APR.
- Select 5 years as the loan term.
- Click "Calculate".
The calculator will compute:
- Monthly payment: $456.23
- Total interest paid: $3,746.60
- Total cost of the loan: $28,746.60
This example shows that over the life of the loan, you would pay $3,746.60 in interest, bringing the total cost to $28,746.60. This information helps you understand the true cost of financing the vehicle.
Frequently Asked Questions
What is the difference between APR and interest rate?
The annual percentage rate (APR) is the total cost of borrowing expressed as a yearly rate, including any fees. The interest rate is the cost of borrowing without fees. APR is always higher than the interest rate because it includes fees.
How does a longer loan term affect my monthly payments?
A longer loan term typically results in lower monthly payments but more total interest paid over the life of the loan. A shorter term usually means higher monthly payments but less total interest paid. The best term depends on your financial situation and goals.
Can I use this calculator for both new and used cars?
Yes, the Bankrate Loan Calculator Auto can be used for both new and used cars. The calculation is the same regardless of the vehicle type. However, the loan amount and terms may vary depending on the vehicle's price and your financial situation.