Car Loan Calculator

How to Calculate a Car Loan

Our online car loan calculator will help you work out just how much your monthly car loan repayments will actually be. This calculator will also display an illustration of how much you should expect to repay on a monthly basis. When taking out a car loan, you should:

  • Use our interest calculator to provide you with an illustration of your monthly car loan repayment amounts for different terms and interest rates.
  • Before you commit to a car loan agreement, review the car loan borrowing considerations.

Our car loan calculator will calculate your monthly interest repayment over several years then compare them to a separate monthly repayment period, which you can choose.

Car Loan Formula

The Car Loan Calculator uses the following basic formula:

Monthly Car Loan Payment = { Rate + Rate / [(1 + Rate) months -1] } x Principal Car Loan Amount


Rate (Monthly Interest Rate) = Decimal Rate / 12 , or Rate = (Annual Interest Rate / 100) / 12

Car Loan Repayment Calculator


  Car Loan Repayment Term
1 Year
12 months
3 Years
36 months
5 Year
60 months
10 Years
120 months

Things to Consider When Taking Out a Car Loan

  • Affordable: Make sure that you are able to afford the repayments that are to come on your car loan. You are the only one who really knows whether or not you can invest in a new car, and whether or not taking out loans will only cause more financial struggles in the future.
  • Look At Different Companies: Before you even consider the loan, take a look at a variety of different companies. Check out both banks and lender companies. Find out how flexible they are as a business, and the rates that they offer. Be careful when looking at car dealerships when taking out a loan, banks are usually quite a bit cheaper than car dealerships.
  • Research: It's important to research on better deals. It's not uncommon for to banks run promotions at certain times of the year, so never presume that one bank is better than the other. Banks are a lot cheaper when it comes to interest than car dealerships.
  • Interest Rates: Make sure you fully read into the interest rates applied to the car loan. You may think that you are getting an incredibly deal with a low-interest rate, but on the other hand you may have to pay that loan off for another couple of years meaning you are paying a noticeably larger amount.
  • Borrow Little, Repay Quickly: It's important that you don't get out of your depths with your loan. Borrow the minimum amount you need to take out the loan, and repay it as soon as you can.
  • Pay Day Loans: Never use a Pay Day lender, this is a fantastic way to completely destroy your financial credibility. These lenders have no consideration of your well-being and will help destroy your financial situation as long as it benefits them. Avoid them at all costs.
  • Don't Lend at All: Although it may be difficult in the current day and age, try to avoid taking out a loan all together. It may be tempting to get that little extra money to buy your car, but it will feel a lot better if you earn the money yourself.
  • Choose Between a Personal Loan or a Car Loan: Again, do your research. Although personal loans usually offer far better interest rates than car loans. Car dealerships are known to push you towards taking out loans which have a ridiculous APR rate. When you are looking to invest in buying a new car, be patient and look at different lenders.
  • Personal Contract Purchase (PCP): PCP's are becoming increasingly popular over recent years. This is because they allow there to be no deposit required for a loan. Although PCP's are often a good choice, be aware of the risks you are taking with them. These risks consist of:
  • Understand that you do not own the company. The car is the legal responsibility of the financial company and definitely not you. Until you have paid the final payment, you do not own the car.
  • There are normally mileage restrictions included in PCP contracts. This restriction is usually annually and if you exceed the limitation you will be subject to being charged additional fees if you choose not to pay the final payment.
  • Once you have signed the contract and choose that it is no longer the car you want, or your overall circumstances change, you are able to cancel the contract although there are fees including in doing that.
  • As much as you want to, you cannot make any modifications to the vehicle. New wheels? Tinted windows? Don't as much as think about it. Remember, it isn't your car, you can't make these sorts of changes to it.

You may also be interested in our free Car Depreciation Calculator

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