Auto Finance Calculator – Calculate Loan Payment

An Auto Finance Calculator can be used to get an estimate of your monthly vehicle payments, interest paid and overall car, SUV, truck or vehicle financing costs. This helps you understand what you could be paying if you decide to buy a new or second hand vehicle.

When you purchase a vehicle there are many factors that can affect the amount you pay. These include: the deposit, loan, interest rate, loan term, tax and any additional fees. Using an Auto Finance Calculator will help you understand all of these costs.

Using an Auto Finance Calculator can help you to understand:

What you can expect to pay each month in Equated Monthly Instalments (EMI).

How much interest you will pay.

How much you’ll pay depending on the loan term.

The effect of adjusting your deposit. Understanding if you can reduce your monthly payments by taking out a smaller loan.

Whether you are financing in India, United States, United Kingdom, Canada, Australia or another country this calculator can help you understand what you could expect to pay in your chosen currency. The actual finance will depend on your lender, credit profile, vehicle and country laws.

How to Use an Auto Finance Calculator

An Auto Finance Calculator is easy to use. Just follow the steps below.

Enter the vehicle price.

Enter the deposit. This is how much you are going to pay up front. The remainder may be financed with an Auto Loan.

Enter the interest rate. This is the interest rate your bank, credit union or dealerships are offering annually.

Select the loan term. How many months/years are you going to take the loan for?

If available enter any additional costs. Such as tax, registration, dealer fees.

Click calculate. This will show you an estimate of how much you’ll pay per month, total interest and total amount to pay back.

You can adjust the deposit, interest rate and loan term to see how it affects your monthly payments.

To get the most accurate results enter the exact details of your finance offer. If you are still looking at different vehicles you can enter different totals to see what you could expect to pay for different vehicle prices.

Auto Finance Calculator Formula

Most Auto Finance Calculators will use the standard EMI formula.

EMI = [P x r x (1 + r) n ] / [(1 + r) n – 1]

Where:

EMI = Monthly vehicle payments.

P = Total loan amount.

r = Monthly interest rate (as a decimal).

n = Total number of monthly payments.

To get the monthly interest rate, divide the annual interest rate by 12 and then by 100.

E.g. If you have an annual interest rate of 8%.

r = 8 / (12 x 100) = 0.006667

If your vehicle costs you a deposit of $32,000 and you make a $7,000, your loan amount will be:

P = $32,000-\\$7,000=\\$25,000

The total amount to pay back will be:

Total Repayment = EMI x n

The total interest you’ll pay will be:

Total Interest = Total Repayment – P

This assumes you are making regular monthly payments, the interest rate is fixed and there are no additional fees or increased principle payments.

Example

Say you want to purchase a vehicle for yourself or your family and will be financing the remainder.

Your Auto Finance details are:

Auto Finance Detail Amount

Vehicle Price $32,000

Deposit $7,000

Loan $25,000

Interest Rate 8%

Loan Term 5 Years

Total Monthly Payments 60

Using the standard EMI formula you can expect to pay around $507.28 per month.

Your repayment breakdown will be:

Calculation Estimated Amount

Monthly Payment $507.28

Total Repayment $30,436.80

Total Interest $5,436.80

Loan Amount $25,000

These are just examples and are rounded. This assumes a fixed interest rate of 8% annually and monthly payments. It also doesn’t include any additional taxes, fees and insurance.

This example shows you would be financing $25,000 over five years could result in approximately $5,437. By adjusting your deposit and loan term you can see if you can reduce your overall costs.

Understanding your Results

Once you’ve completed the Auto Finance Calculator you should look at the key figures.

Monthly Payment – This is an estimate of how much you’ll be paying per month. You should compare this with your income and other costs to understand if it is affordable.

Total Interest – This is an estimate of how much you’ll be paying in interest. This doesn’t include any fees.

Total Amount to Pay Back – This is the total amount you’ll be paying back including principle and interest.

Deposit – How much you’re paying upfront towards your vehicle. Increasing this will reduce your loan amount.

Loan Term – How long you’ll be making monthly payments. Increasing this will reduce your monthly payments but increase the overall interest.

Overall – Think about any additional costs of owning the vehicle such as fuel, servicing, insurance, parking and registration.

A lower monthly payment doesn’t always mean it’s cheaper. Always compare the monthly payment with the overall total to pay back.

Factors That Affect the Results

There are many factors which can affect your results.

Vehicle Price – More expensive vehicles will usually require a larger loan.

Deposit – The more you pay upfront the less principle you’ll have to pay. Usually reducing the interest.

Interest Rate – The higher the interest rate the more you’ll be paying monthly and overall.

Loan Term – The longer the term the less you’ll be paying monthly. However, the overall interest may increase.

Credit History – Your credit score and financial profile may affect the interest rate.

Vehicle Age/Condition – New and second hand vehicles may have different financing terms.

Taxes/Fees – Registration, dealer fees etc. may increase the loan amount.

Trade-in – If you qualify for a trade-in this can reduce the amount you need to borrow.

Additional Payments – Extra principle payments may reduce the interest.

Balloon Payments – Some finance agreements include a larger payment at the end which may not be included in a standard EMI calculation.

Understanding the factors will help you compare finance offers and choose one that suits your financial situation.

Benefits & Uses

An Auto Finance Calculator can help with:

Budgeting – Get an estimate of how much you’ll be paying monthly.

Comparing – Compare different interest rates, deposits and loan terms.

Understanding – Understand how much you’ll be paying in interest.

Choosing the Right Loan Term – Find a loan term that works for you.

Comparing Prices – Understand how much you could expect to pay for different car models.

Negotiating – Get an idea of how much your loan will change depending on the vehicle price and deposit.

Avoid Overpaying – Find an amount that works better with your income and regular costs.

The calculator can be useful when comparing bank loans, dealership financing and other vehicle financing offers. However, this does not guarantee you’ll be approved for a loan.

Accuracy, Assumptions & Limitations

An Auto Finance Calculator will give you an estimate based on the information you have entered. Most basic calculators will assume you are getting a fixed interest rate, making equal monthly payments and standard amortisation.

The actual payments may vary due to lender fees, tax, insurance, variable interest rates, promotional offers and other terms. If you are financing registration charges, extended warranty and dealer add-ons your principle may be higher than the vehicle price minus deposit.

Basic calculators may not account for balloon payments, residual value, negative equity from a trade-in, irregular payment terms, early repayment charges and other fees.

When budgeting try to enter the correct loan amount and interest rate. Check your lenders official repayment schedule. Compare multiple scenarios. Don’t forget to think about the overall cost of owning the vehicle.

FAQs

1. What is an Auto Finance Calculator?

An Auto Finance Calculator is an online tool that will help you find an estimate of your monthly payments, total interest and total amount to pay back based on the principle, annual interest rate and loan term.

2. How do I work out my monthly auto finance payments?

Simply enter how much you are looking to borrow, the interest rate and loan term. The standard EMI formula will give you an estimate.

3. Can I include a deposit?

If there is an option to include a deposit, you can enter it and the calculator will subtract it from the vehicle price to give you an estimate of your principle. If there isn’t enter your loan amount separately.

4. Should I take out a longer loan term?

The longer the loan term the less you’ll be paying monthly however you may pay more interest overall. A shorter term usually means you’ll pay less overall but more per month.

5. Can I use an Auto Finance Calculator for second hand vehicles?

Yes! Just enter the vehicle price, deposit, interest rate and loan term. The interest rates and terms will vary depending on how old and in good condition the vehicle is.

6. Can I use this calculator internationally?

Yes! The standard EMI formula can be used with USD, INR, GBP, CAD, AUD. However the way interest rates are calculated, fees, taxes and financing laws will be different.

7. Can I expect an exact figure?

No. This will just give you an estimate based on the information you enter. The actual payments may vary due to fees, taxes, lender terms, variable interest rates and other finance terms. Always check with your lender to confirm your final figures before signing any finance agreements.