Carvana, a prominent online used car retailer, offers a streamlined process for purchasing vehicles, including financing options. Understanding how their loan calculator works can help you budget effectively for your next car. This calculator estimates your potential monthly car payment based on several key factors: the price of the car, your down payment, the loan term (how long you'll be paying it off), and the annual interest rate.
The Math Behind the Monthly Payment:
The calculation for a typical auto loan (and thus, the Carvana loan calculator) uses the standard
amortization formula
. The formula 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 = Total number of payments (Loan Term in Months)
Our calculator takes the inputs you provide (Car Price, Down Payment, Loan Term, and Annual Interest Rate) and plugs them into this formula to give you an estimated monthly payment.
Key Considerations for Carvana Financing:
Loan Amount (Principal, P): This is the actual amount you need to borrow. It's calculated by subtracting your down payment from the total price of the car. A larger down payment reduces your principal, leading to lower monthly payments and less interest paid over time.
Interest Rate (Annual & Monthly, i): The annual interest rate (APR) significantly impacts your monthly payment and the total cost of the loan. A higher APR means you'll pay more in interest. Carvana, like other lenders, will determine your interest rate based on your creditworthiness. The calculator uses the monthly rate, derived by dividing the annual rate by 12.
Loan Term (n): This is the duration over which you'll repay the loan, expressed in months. A longer loan term will result in lower monthly payments but means you'll pay more interest over the life of the loan. Conversely, a shorter term means higher monthly payments but less total interest paid.
Accuracy Disclaimer: This calculator provides an estimate. Actual loan offers from Carvana may vary due to factors such as specific loan products, lender fees, taxes, registration costs, and your unique credit profile. It's crucial to review the official loan terms provided by Carvana.
Using this calculator can help you set realistic expectations and explore different scenarios (e.g., how a larger down payment or a shorter loan term affects your monthly budget) before you proceed with a purchase on Carvana.
function calculateMonthlyPayment() {
var carPrice = parseFloat(document.getElementById("carPrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(carPrice) || carPrice <= 0) {
resultDiv.innerHTML = 'Please enter a valid Car Purchase Price.';
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = 'Please enter a valid Down Payment.';
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = 'Please enter a valid Loan Term (in months).';
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
resultDiv.innerHTML = 'Please enter a valid Annual Interest Rate.';
return;
}
var principal = carPrice – downPayment;
if (principal 0) {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTerm)) / (Math.pow(1 + monthlyInterestRate, loanTerm) – 1);
} else {
// Handle case with 0% interest rate
monthlyPayment = principal / loanTerm;
}
// Format the result to two decimal places
var formattedMonthlyPayment = monthlyPayment.toFixed(2);
resultDiv.innerHTML = '$' + formattedMonthlyPayment + 'Estimated Monthly Payment';
}