Financing a car is a significant financial decision. A car loan, also known as an auto loan, allows you to borrow money from a bank or other financial institution to purchase a vehicle. You then repay this loan over a set period with interest. Understanding how your monthly payments are calculated is crucial for budgeting and making an informed choice.
How the Car Loan Calculator Works
This calculator uses a standard formula to estimate your monthly car loan payments. The primary factors influencing your payment are:
Loan Amount (Principal): This is the total amount of money you are borrowing to buy the car.
Annual Interest Rate: This is the yearly percentage charged by the lender for the loan. It's important to note that this rate is converted to a monthly rate for the calculation.
Loan Term: This is the total number of years (or months) you have to repay the loan. A longer term usually means lower monthly payments but higher total interest paid over time.
The Math Behind the Monthly Payment
The most common formula used to calculate the monthly payment (M) for an amortizing loan is the following:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly loan payment
P = The principal loan amount (the car's price minus your down payment)
i = Your monthly interest rate. This is calculated by dividing the annual interest rate by 12. For example, an annual rate of 5.5% becomes 0.055 / 12 = 0.004583.
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the loan term in years by 12. For example, a 5-year loan means 5 * 12 = 60 payments.
Calculating Total Interest and Repayment
Once the monthly payment is calculated, we can determine the total amount of interest paid and the total amount repaid:
Total Interest Paid = (M * n) – P
Total Repayment = M * n
This calculator helps visualize how different loan amounts, interest rates, and terms affect these figures, empowering you to negotiate better terms or choose a loan that fits your financial situation.
var loanAmountInput = document.getElementById('loanAmount');
var interestRateInput = document.getElementById('interestRate');
var interestRateSlider = document.getElementById('interestRateSlider');
var interestRateSpan = interestRateInput.nextElementSibling.nextElementSibling; // The span showing the value
var loanTermInput = document.getElementById('loanTerm');
var loanTermSlider = document.getElementById('loanTermSlider');
var loanTermSpan = loanTermInput.nextElementSibling.nextElementSibling; // The span showing the value
// Sync slider and input field for interest rate
interestRateInput.oninput = function() {
interestRateSlider.value = this.value;
interestRateSpan.textContent = parseFloat(this.value).toFixed(1) + '%';
}
interestRateSlider.oninput = function() {
interestRateInput.value = this.value;
interestRateSpan.textContent = parseFloat(this.value).toFixed(1) + '%';
}
// Sync slider and input field for loan term
loanTermInput.oninput = function() {
loanTermSlider.value = this.value;
loanTermSpan.textContent = this.value + ' Years';
}
loanTermSlider.oninput = function() {
loanTermInput.value = this.value;
loanTermSpan.textContent = this.value + ' Years';
}
function calculateCarLoan() {
var principal = parseFloat(document.getElementById('loanAmount').value);
var annualInterestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseInt(document.getElementById('loanTerm').value);
var monthlyPaymentDiv = document.getElementById('monthlyPayment');
var totalInterestDiv = document.getElementById('totalInterest');
var totalRepaymentDiv = document.getElementById('totalRepayment');
// Clear previous results and set default text
monthlyPaymentDiv.textContent = '$0.00';
totalInterestDiv.textContent = '$0.00';
totalRepaymentDiv.textContent = '$0.00';
// Input validation
if (isNaN(principal) || principal <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment = 0;
var totalInterest = 0;
var totalRepayment = 0;
// Check for edge case: 0% interest rate
if (monthlyInterestRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
// Standard amortization formula
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
totalRepayment = monthlyPayment * numberOfPayments;
totalInterest = totalRepayment – principal;
// Format and display results
monthlyPaymentDiv.textContent = '$' + monthlyPayment.toFixed(2);
totalInterestDiv.textContent = 'Total Interest: $' + totalInterest.toFixed(2);
totalRepaymentDiv.textContent = 'Total Repayment: $' + totalRepayment.toFixed(2);
}
// Initial calculation on page load with default values
document.addEventListener('DOMContentLoaded', function() {
calculateCarLoan();
});