How to Calculate Interest Rates on a Car Payment

Car loans are great for getting you on the road but the downside is you end up paying more for the car in the long run than you would have it you had bought with cash. Interest rates on loans are determined by factors like your credit score, the car (model and condition), loan length, and the lender. Read the steps below for help on calculating interest rates on a car payment.

Difficulty: Moderately Easy

Instructions

1. Gather the important numbers: Amount left on your loan and interest rate (also known as the "APR" or annual percentage rate).

2. Multiply the remaining loan amount by the interest rate and divide by 12 to get the current payment interest rate. For example, if your car loan has $8500 remaining and your interest rate is 7.5 percent, multiply 8500 by .075 for a total of $637.50.

3. Divide $637.50 by 12 to get the interest on the current payment. 637.5 / 12 = $53.13.

4. Use the same formula for the next payment but begin with the new reduced amount remaining on your car loan.

Resources

• Auto Loan Calculator
• Excel Interest Rate Formula