Monthly Payment: $0.00
Enter details and click "Calculate Payment"
Understanding Your Used Car Loan Payment
Financing a used car involves borrowing money to cover the purchase price, minus any down payment you make. The loan is then repaid over a set period with interest. This calculator helps you estimate your potential monthly car payment, a crucial step in budgeting for your vehicle.
How the Calculation Works
The monthly payment for an auto loan is calculated using the standard annuity formula. The formula takes into account the principal loan amount, the interest rate, and the loan term. Here's a breakdown:
Principal Loan Amount (P): This is the total amount you need to finance. It's calculated as: Car Price – Down Payment.
Monthly Interest Rate (r): The annual interest rate is divided by 12 to get the monthly rate. If the Annual Interest Rate (AIR) is 7.5%, the monthly rate is 7.5% / 12 = 0.625% or 0.00625 in decimal form.
Loan Term in Months (n): This is the total number of payments you will make, given in months.
The formula for the Monthly Payment (M) is:
M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount
r = Monthly Interest Rate
n = Total Number of Payments (loan term in months)
Key Factors to Consider:
Car Price: The total cost of the used vehicle.
Down Payment: The amount you pay upfront. A larger down payment reduces the principal loan amount, leading to lower monthly payments and potentially less interest paid over the life of the loan.
Loan Term: The duration of the loan. Longer terms generally result in lower monthly payments but can mean paying more interest overall. Shorter terms have higher monthly payments but less total interest.
Annual Interest Rate (APR): This is the cost of borrowing money. Your creditworthiness significantly impacts the APR you'll qualify for. A lower APR means you pay less interest over time.
Why Use This Calculator?
Budgeting: Helps you determine if a car is financially feasible by estimating the monthly cost.
Comparison: Allows you to compare different financing scenarios (e.g., varying down payments, loan terms, or interest rates).
Negotiation: Knowing your estimated payment can empower you when negotiating with dealers or lenders.
Remember that this calculator provides an estimate. Actual loan offers may include additional fees (like origination fees or taxes) not factored into this basic calculation. It's always recommended to get pre-approved by a lender and review all loan documents carefully.
This calculator is for informational purposes only and should not be considered financial advice. Rates and terms may vary. Consult with a financial professional for personalized guidance.
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");
if (isNaN(carPrice) || carPrice <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0) {
resultDiv.innerHTML = "Monthly Payment: Invalid Input Please enter valid numbers for all fields.";
resultDiv.style.backgroundColor = "#dc3545"; // Red for error
return;
}
var loanAmount = carPrice – downPayment;
if (loanAmount <= 0) {
resultDiv.innerHTML = "Monthly Payment: $0.00 Down payment covers the full car price.";
resultDiv.style.backgroundColor = "#28a745"; // Green for success
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTerm;
var monthlyPayment = 0;
if (monthlyInterestRate > 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle 0% interest rate case
monthlyPayment = loanAmount / numberOfPayments;
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Monthly Payment: Calculation Error Could not compute payment. Check inputs.";
resultDiv.style.backgroundColor = "#dc3545"; // Red for error
return;
}
resultDiv.innerHTML = "Monthly Payment: $" + monthlyPayment.toFixed(2) +
"Based on your inputs";
resultDiv.style.backgroundColor = "#28a745"; // Green for success
}