Car Finance Calculator – Estimate Your Payments

A Car Finance Calculator is an online tool which will help you work out how much you’ll pay per month, the total amount of interest and overall how much you’ll pay for financing your car. Whether it’s a new car, second hand or even upgrading to a family SUV, this tool will help you work out how much you’ll need to pay.

When buying a car you’ll often have to pay a variety of costs including the price of the car itself, deposit, interest, tax, registration fees and insurance. Using a Car Finance Calculator will allow you to see your loan repayments and work out how much you’ll be paying based on how much you can afford, interest rate and loan term.

By entering some simple information you will be able to compare how much you’ll pay for financing your car, your estimated Equated Monthly Instalment (EMI) and see how much you’ll pay depending on your loan term. You can also vary how much you’re paying as a deposit to see if you can save by reducing how much you’re borrowing.

Whether you’re looking to finance a car in India, US, UK, Canada, Australia or elsewhere this calculator will help you work out how much you’ll pay in your chosen currency. This is based on the lender you choose and your personal finances.

How to Use the Car Finance Calculator

1. Enter the price of your car.
2. Enter your deposit amount.

A higher deposit will usually mean you’re borrowing less.

1. Enter your interest rate.

Enter the annual interest rate you’ll receive from your bank, credit union or car dealership.

2. Enter the loan term.

Select how long you want to take to pay back your loan. This can be in months or years.

3. Additional costs (if applicable).

If you have any additional costs such as tax, registration fees, dealerships fees etc add them.

4. Calculate.

Click calculate to see how much you’ll pay per month, total interest and total amount to pay back.

5. Compare.

You can vary the amount you’re paying as a deposit, interest rate and loan term to see what works best for your budget.

To get accurate figures enter the details from your financing offer. If you’re still looking at different cars to buy, enter different car prices to see how much you’d be able to afford.

Car Finance Calculator Formula

The majority of Car Finance Calculators use the standard EMI formula.

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

EMI = Monthly payment for car

P = Principal loan amount

r = Monthly interest rate (in decimals)

n = Total number of monthly payments

The monthly interest rate can be worked out by dividing the annual interest rate by 12 and then again by 100.

For example, if your interest rate is 8%:

r = 8 / (12 x 100) = 0.006667

If your car is costing $28,000 and your down payment is $6,000 then your principal loan amount will be:

P = $28,000-\\$6,000=\\$22,000

Total repayment amount:

Total Repayment = EMI x n

Total Interest:

Total Interest = Total Repayment – P

This assumes your interest rate is fixed, you’re paying the same amount each month and there are no additional fees or extra principal payments.

Example Calculation

Let’s look at an example. Suppose you want to buy a car and will finance the rest from your bank or dealership.

Finance Details

Car Price $28,000

Deposit $6,000

Loan Amount $22,000

Annual Interest Rate 8%

Loan Term 5 Years

Total Monthly Payments 60

Using the standard EMI formula you’ll pay approximately $446.20 per month.

Breakdown of your repayments:

Monthly Payment $446.20

Total Repayment $26,772

Total Interest $4,772

Loan Amount $22,000

These are approximated and assume a fixed interest rate of 8% per annum. No taxes, fees, insurance or extra charges are included.

This shows you’ll be paying to finance your car and will pay $22,000 car balance over five years could result in approximately $4,772 in interest. You can vary the deposit and loan term to see how much you’ll pay.

What does the result mean?

Now you’ve worked out how much you’ll pay for financing your car, look at the following:

1. Monthly Payment

This is how much you’ll pay per month. Look at how much you earn per month and other commitments to see if you can afford.

2. Total Interest

This shows you how much you’ll pay in interest for borrowing money.

3. Total Repayment

This is how much you’ll pay in total including the principal and interest.

4. Deposit

This is how much you’re paying upfront. Usually the higher the deposit the lower your loan amount and interest.

5. Loan Term

This shows how long you’re paying back your loan. The longer the term, the lower your monthly payments but you’ll pay more in interest.

6. Affordability

Consider any additional costs for your car including fuel, servicing, insurance, parking and registration.

The lower your monthly payments isn’t always the cheapest. Consider how much you’ll pay per month and total repayment.

Factors that affect the result

There are many factors that will affect the result of your Car Finance Calculator:

Car Price – The higher the price of your car the more you’ll likely be borrowing.

Deposit – The higher your deposit the lower your principal.

Interest Rate – Higher interest rate means higher monthly payments.

Loan Term – The longer the loan term the lower your monthly payments but you’ll pay more in interest.

Credit History – Your credit history may impact the interest rate.

New or Second Hand – Lenders may charge different rates depending on how old your car is.

Taxes and Fees – You may have to pay dealer fees, registration and taxes meaning you’ll be borrowing more.

Trade-in – If your trade-in is eligible you may be able to reduce how much you need to pay for your next car.

Extra Payments – If you make extra payments towards your principal this may reduce your interest. This depends on your lender.

Balloon or Residual Payment – Some financing agreements require you to pay a higher amount at the end. This won’t be covered by a basic EMI calculator.

Understanding these factors will help you compare different offers and choose the right option for you.

Benefits and Uses

Using a Car Finance Calculator has many benefits:

Work out your monthly budget – Work out how much you’ll be paying per month before visiting a dealership.

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

See how much you’ll pay – See how much you’ll be paying in interest.

Choose the right loan term – Choose the right loan term so you won’t be paying too much per month but not too much overall.

Compare – See how much different cars will cost.

Know what to expect – Know how much you’ll be paying if you change the price or deposit.

Avoid borrowing too much – Work out how much you’ll be borrowing based on your income and other costs.

This can be a useful tool to compare different loan options from banks, dealerships and other car financing options. This doesn’t guarantee you’ll be approved for a loan and is an estimation.

Accuracy, Assumptions and Limitations

The Car Finance Calculator will give you an estimate based on the information entered. Most standard calculators assume a fixed interest rate, equal monthly payments and a traditional amortising loan.

You may not pay exactly what is shown as the lender may have fees, taxes, insurance, promotional offers, variable interest rates and other terms. If you have registration charges, dealerships extras or warranties you may have a higher principal amount than your car price minus deposit.

Basic calculators may not include balloon payments, residual value, negative equity from your trade-in or special repayments. They may also not include early repayment fees or other charges.

If you’re purchasing a car in another country make sure to check the financing regulations, currency and lender specific terms. Always check the official loan agreement.

To get a more realistic picture compare a few different scenarios. Think about the overall cost of owning the car.

FAQs

1. What is a Car Finance Calculator?

A Car Finance Calculator is an online tool which will help you work out how much you’ll pay per month, total interest and total amount to pay based on how much you’re borrowing, annual interest rate and loan term.

2. How do I work out how much I’ll pay per month?

Enter your loan amount, annual interest rate and loan term. The calculator will use the standard EMI formula to work out how much you’ll pay.

3. Does it include a deposit?

If the calculator includes an option for a deposit then it will subtract this from the price of your car. If it doesn’t then work out your loan amount separately.

4. Is it better to have a longer loan term?

Having a longer loan term will reduce your monthly payments but you’ll pay more in interest. Having a shorter loan term will usually cost less in interest but you’ll pay more per month.

5. Can I use it for second hand cars?

Yes you can. Enter the price, deposit, interest rate and loan term. The interest rate and loan eligibility will depend on how old your car is, how it’s in condition and lender requirements.

6. Can I use it in different countries?

Yes you can. The standard EMI formula works with currencies including USD, INR, GBP, CAD and AUD. The way the interest is calculated, fees, taxes and financing regulations may vary.

7. Is it accurate?

No it isn’t. It’s an estimation and you may not pay the same amount due to fees, taxes, lender terms, variable rates and extra repayment terms. Always confirm the final figures with your lender.