Purchasing a new car is an exciting milestone, and understanding the financing involved is crucial. The monthly payment for your car loan is determined by several key factors, and this calculator helps you estimate it.
How the Calculation Works
The monthly payment for an auto loan is calculated using a standard loan amortization formula. Here's a breakdown of the inputs and the underlying math:
Car Price: The total cost of the vehicle you intend to purchase.
Down Payment: The upfront amount you pay towards the car's price. This reduces the total amount you need to finance.
Loan Term: The duration, typically in years, over which you will repay the loan. Longer terms usually result in lower monthly payments but more interest paid over time.
Annual Interest Rate (APR): This is the yearly cost of borrowing money, expressed as a percentage. A lower APR means less interest paid.
The formula used to calculate the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal Loan Amount (Car Price – Down Payment)
n = Total Number of Payments (Loan Term in Years * 12)
Key Considerations
Principal Loan Amount (P): This is the core of your loan. A larger down payment directly reduces this amount, leading to lower monthly payments and less interest overall.
Monthly Interest Rate (i): The annual rate is divided by 12 to get the monthly rate. Even small differences in APR can significantly impact your total interest paid over the life of the loan. Always shop around for the best APR.
Total Number of Payments (n): This is the loan term multiplied by 12. While a longer term (more payments) might lower your monthly payment, it often means paying substantially more in interest.
Use Case: Use this calculator before visiting a dealership to get a realistic idea of what you can afford. Input different loan terms and interest rates to see how they affect your budget. Remember that this calculator provides an estimate; actual payments may vary slightly due to lender-specific fees or slight variations in calculation methods.
function updateSliderValue(sliderId, spanId) {
var slider = document.getElementById(sliderId);
var span = document.getElementById(spanId);
span.textContent = slider.value;
}
function calculateCarPayment() {
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("annualInterestRate").value);
var monthlyPaymentResultElement = document.getElementById("monthlyPaymentResult");
// Basic validation
if (isNaN(carPrice) || carPrice <= 0) {
monthlyPaymentResultElement.textContent = "Invalid Car Price";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
monthlyPaymentResultElement.textContent = "Invalid Down Payment";
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
monthlyPaymentResultElement.textContent = "Invalid Loan Term";
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
monthlyPaymentResultElement.textContent = "Invalid Interest Rate";
return;
}
var loanAmount = carPrice – downPayment;
if (loanAmount <= 0) {
monthlyPaymentResultElement.textContent = "$0.00";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment;
if (monthlyInterestRate === 0) {
monthlyPayment = loanAmount / numberOfPayments;
} else {
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
monthlyPayment = loanAmount * (numerator / denominator);
}
monthlyPaymentResultElement.textContent = "$" + monthlyPayment.toFixed(2);
}
// Initialize slider values display
document.addEventListener('DOMContentLoaded', function() {
updateSliderValue('loanTerm', 'loanTermValue');
updateSliderValue('annualInterestRate', 'annualInterestRateValue');
});