When you are calculating a car loan, there are two things you need to know: the purchase price of the car and the interest rate. To calculate the monthly payments, you will need to use this formula:
Monthly Payment = (Purchase Price x Interest Rate) / (1 – (1 + Interest Rate) ^-Term))
For example, if you want to borrow $10,000 at an interest rate of 6%, your monthly payments would be:
Monthly Payment = ($10,000 x .06) / (1 – (1.06) ^-36)) = $175.53
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