This calculator helps you estimate your monthly payment for a car loan from RBFCU (Randolph-Brooks Federal Credit Union). Understanding the factors that influence your loan payment is crucial for budgeting and making informed financial decisions. The calculation is based on the principal loan amount, the interest rate, and the loan term.
How the Calculation Works
The standard formula for calculating a fixed monthly loan payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly loan payment
P = The principal loan amount (Car Price – Down Payment)
i = Your monthly interest rate (Annual Interest Rate / 12 / 100)
n = The total number of payments (Loan Term in Years * 12)
Key Terms Explained:
Car Price: The total cost of the vehicle you intend to purchase.
Down Payment: The upfront amount of money you pay towards the car's price. This reduces the total amount you need to borrow.
Loan Amount (Principal): This is the amount you will finance. It's calculated as: Car Price - Down Payment.
Annual Interest Rate: The yearly percentage charged by the lender (RBFCU) on the loan amount. A lower interest rate means lower overall interest paid.
Loan Term: The duration of the loan, usually expressed in years. A longer loan term will result in lower monthly payments but more interest paid over the life of the loan.
Monthly Interest Rate: The annual rate is converted to a monthly rate by dividing by 12 and then by 100 (to convert percentage to decimal).
Total Number of Payments: The loan term in years is multiplied by 12 to get the total number of monthly payments required.
Example Scenario:
Let's say you're looking to buy a car with the following details:
Then, calculate the total number of payments (n):
5 Years * 12 months/year = 60 months
Plugging these into the formula:
M = 25000 [ 0.0045833(1 + 0.0045833)^60 ] / [ (1 + 0.0045833)^60 – 1]
This results in an estimated monthly payment of approximately $479.17.
Tips for Using the Calculator:
Experiment with different car prices, down payments, loan terms, and interest rates to see how they affect your monthly payment.
A larger down payment significantly reduces your loan amount and can lead to lower monthly payments and less interest paid overall.
Consider shorter loan terms for lower total interest paid, but be aware that this will increase your monthly payments.
Remember that the interest rate offered by RBFCU will depend on your creditworthiness and market conditions.
This calculator provides an estimate. Actual loan terms and payments may vary. Please consult directly with RBFCU for personalized loan offers and precise figures.
function calculateCarLoan() {
var carPrice = parseFloat(document.getElementById("carPrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var resultElement = document.getElementById("result").querySelector("span");
resultElement.textContent = "$0.00"; // Reset result
// Input validation
if (isNaN(carPrice) || carPrice <= 0) {
alert("Please enter a valid Car Price.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid Down Payment.");
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please select a valid Loan Term.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate carPrice) {
alert("Down payment cannot be greater than the car price.");
return;
}
var principal = carPrice – downPayment;
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment = 0;
if (monthlyInterestRate === 0) {
// Handle zero interest rate case to avoid division by zero in the formula
monthlyPayment = principal / numberOfPayments;
} else {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
// Display the result, formatted to two decimal places
resultElement.textContent = "$" + monthlyPayment.toFixed(2);
}