How to Calculate a Car Payment
Updated
Plain-English explanation of the auto loan payment formula, amount financed, and the levers that affect your monthly cost.
A car payment is calculated with the standard amortizing formula: payment = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is the amount financed, r is the monthly interest rate, and n is the number of monthly payments.
The fixed monthly auto loan payment is calculated using: P = A × r(1+r)n / ((1+r)n − 1), where A is the amount financed, r is the monthly rate (APR ÷ 12), and n is the term in months.
The amount financed is the vehicle price plus tax and fees, minus down payment, positive trade-in equity, and rebates. Negative trade-in equity (when payoff exceeds value) is added to the financed amount.
Try the auto loan calculator or the amortization calculator.