Estimate your monthly car loan payments. This is for informational purposes only and does not constitute a loan offer.
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Estimated Monthly Payment
$0.00
Understanding Your Car Payment
Financing a car is a significant financial decision. Understanding how your monthly car payment is calculated is crucial for budgeting and making informed choices. This calculator helps you estimate your monthly loan payments, considering the car's price, your down payment, the interest rate, and the loan term.
How the Calculation Works
The monthly car payment is calculated using a standard loan amortization formula. The formula takes into account the principal loan amount (car price minus down payment), the monthly interest rate, and the total number of payments.
The formula for the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (Car Price – Down Payment).
i = Monthly interest rate. This is your Annual Interest Rate divided by 12. For example, if the annual rate is 6%, the monthly rate (i) is 0.06 / 12 = 0.005.
n = Total number of payments. This is your Loan Term in Years multiplied by 12. For a 5-year loan, n = 5 * 12 = 60.
Key Factors Influencing Your Payment:
Car Price: The higher the price of the vehicle, the larger the loan amount will be, generally leading to higher monthly payments.
Down Payment: A larger down payment reduces the principal loan amount (P), which directly lowers your monthly payments and the total interest paid over the life of the loan.
Interest Rate (APR): A lower Annual Percentage Rate (APR) means you pay less interest over time, resulting in lower monthly payments. Interest rates are influenced by your credit score, the lender, and market conditions.
Loan Term: A longer loan term (e.g., 7 years vs. 5 years) spreads the payments out over more months, resulting in lower individual monthly payments. However, you will typically pay significantly more interest over the entire life of the loan.
Why Use a Car Payment Calculator?
A car payment calculator like this one is invaluable for:
Budgeting: Helps you determine if a particular car fits your monthly budget.
Negotiation: You can use it to understand the impact of different loan terms and interest rates offered by dealerships or banks like Bank of America.
Financial Planning: Allows you to compare different financing options and choose the one that best suits your financial goals.
When considering financing through Bank of America or any other institution, always look at the full details of the loan offer, including the APR, loan term, fees, and any pre-payment penalties. This calculator provides an estimate, and actual loan terms may vary.
function calculateCarPayment() {
var loanAmountInput = document.getElementById("loanAmount");
var interestRateInput = document.getElementById("interestRate");
var loanTermInput = document.getElementById("loanTerm");
var downPaymentInput = document.getElementById("downPayment");
var resultValueElement = document.getElementById("result-value");
var totalInterestElement = document.getElementById("total-interest-paid");
// Clear previous results and errors
resultValueElement.textContent = "$0.00";
totalInterestElement.textContent = "";
var carPrice = parseFloat(loanAmountInput.value);
var annualInterestRate = parseFloat(interestRateInput.value);
var loanTermYears = parseInt(loanTermInput.value);
var downPayment = parseFloat(downPaymentInput.value);
// Input validation
if (isNaN(carPrice) || carPrice <= 0) {
alert("Please enter a valid car price.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
alert("Please enter a valid annual interest rate.");
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please select a valid loan term.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid down payment.");
return;
}
var principal = carPrice – downPayment;
if (principal <= 0) {
resultValueElement.textContent = "$0.00";
totalInterestElement.textContent = "Loan amount is zero or negative. No monthly payment needed.";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment = 0;
var totalInterestPaid = 0;
if (monthlyInterestRate === 0) {
monthlyPayment = principal / numberOfPayments;
totalInterestPaid = 0;
} else {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
var totalRepayment = monthlyPayment * numberOfPayments;
totalInterestPaid = totalRepayment – principal;
}
// Format currency and display results
resultValueElement.textContent = "$" + monthlyPayment.toFixed(2);
totalInterestElement.textContent = "Total Interest Paid Over Loan Term: $" + totalInterestPaid.toFixed(2);
}