• Calculate Auto Loan: How to Calculate Your Used Car Interest Payments

    As a car consumer you may be interested in learning how to calculuate auto loan interest payments on your used car loan. Understanding and knowing how to calculate interest payments on used car loans will help you negotiate better auto loan terms and car loan rates because you will have a clearer idea of what to look for in an auto loan. But also know exactly what you can afford so you will be well within your budget. Calculating auto loan interest payments for a used car loan can be accomplished by a simple two step process.

    Step One – Calculate Total Interest Paid

    The first step to determining how to calculate auto loan interest payments is to calculate the total amount of interest paid over the life of the loan. This can be accomplished by multiplying the decimal form of your auto loan rate (0.05 for 5%) by the number of years you will be paying on the loan. As an example, if you have a five year loan with a 5% interest rate, then multiply 0.05 by 5 to get 0.25. Multiply this number by your total loan amount to get the total amount of interest that will be paid out over the life of your loan.

    Step Two – Determine Monthly Payments

    The next step is to divide the total amount of interest paid by the number of years on your loan. In our example, we would divide the interest amount by five (5) to get a yearly interest amount. This number is then divided by 12 to result in the total amount of interest that will be paid each month over the course of the loan. Using an online auto loan calculator can be helpful in determining the total amount of interest and the amount of interest paid monthly on your next auto loan.