Car Loan Calculator

Steps to Use the Calculator

1. Loan Amount ($):

   • Enter the total loan amount in the provided input field. This is the principal amount that you are borrowing.

2. Loan Term:

   • Enter the loan term as a number, which can be in either months or years.
   • Select the appropriate unit for the loan term (months or years) using the dropdown menu.

3. Interest Rate (%):

   • Enter the annual interest rate for the loan in percentage. This should be the nominal annual interest rate provided by the lender.

4. Calculate:

   • Click the “Calculate” button to compute the monthly payment, total payment, and total interest.

5. Review the Results:

   • The results will be displayed below the calculation button, showing:
     • Monthly Payment: The fixed payment amount you need to pay every month.
     • Total Payment: The total amount paid over the life of the loan (including principal and interest).
     • Total Interest Paid: The total interest cost over the life of the loan.

Example

• Loan Amount: $20,000
• Loan Term: 5 years (60 months)
• Interest Rate: 3.5%

After entering these values and clicking “Calculate,” the calculator might show:

• Monthly Payment: $363.11
• Total Payment: $21,786.60
• Total Interest Paid: $1,786.60

This indicates that the monthly payment is $363.11, the total amount paid over the 5 years will be $21,786.60, and the total interest paid on the loan will be $1,786.60.

Formulas Used

1. Monthly Payment:

   $$M=\frac{P\times r}{1-(1+r{)}^{-n}}$$

   Where:

   • 
     $M$

     is the monthly payment

   • 
     $P$

     is the principal loan amount

   • 
     $r$

     is the monthly interest rate (annual rate divided by 12)

   • 
     $n$

     is the total number of payments (loan term in months)

2. Total Payment:

   $$\text{Total Payment}=M\times n$$

3. Total Interest Paid:

   $$\text{Total Interest Paid}=\text{Total Payment}-P$$