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Is there a formula to calculate the interest on a car loan?
Is there a formula that I can use to calculate the interest on my car loan by hand? I know there are calculators online, but I would rather do the math myself if that’s possible.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes, there is a formula that you can use to calculate the interest that you’ll pay on your car loan. You can ask your lender for the monthly payment amount, or you can use this equation to calculate it yourself:
Monthly Payment = loan principal x (monthly interest rate (1 + monthly interest rate) months in loan term) / ((1 + monthly interest rate) months in loan term - 1)
If you don’t know the monthly interest rate, you can simply divide the APR by 12.
Once you know your monthly payment amount, you can use this equation to find the total interest:
(The monthly payment amount x the loan term in months) - principal = total interest
Calculating the total interest on a car loan can be complicated, but it’s easy to find the best car insurance rates when you use the
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