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Calculate a monthly car payment


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Calculate a monthly car payment is something you can’t overlook when buying a new car or used car. It is important and we teach you how to calculate here. The car payment is what you will pay to creditor or bank loan from part of your monthly salary therefore you must calculate in a correct way. This is to ensure you will not run out of your monthly budget for some other expected or unexpected car expenses such as petrol cost, road tax, car insurance, car maintenance…etc.

When buying a car, always look at the 3 major amount which is buying price (base price), given interest rate (the interest percentage %) by car dealer, and loan term (period of month or weeks you want to take the car loan). Less talking just begins your calculation now!

You will only need a normal or most basic calculator to follow this simple formula.

Monthly Payment = (Loan amount x IR x Term) + Loan amount / Total financed month

Loan amount = Total amount of the car loan which you plan to borrow from the bank or creditors.

Interest Rate (IR) = Annual interest rate given by creditors, bank, or car loans.

Term = Total number of years for this loan.

Total financed month = Total number of months for this loan.

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Here we shared 2 ways on how to calculate a monthly car payment. This is base on some case for bank loan in Asia country only, different country may have different ways to calculate monthly car payment.

1. Calculate monthly payment with given interest

Let’s say:

Loan amount = $20,000

Interest Rate (IR) = 9.0%

Term = 4 years

Total financed month = 48 months

Monthly Payment = (Loan amount x IR x Term) + Loan amount / Total financed month

= (20,000 x 9.0% x 4) + 20,000 / 48

= (1800 x 4) + 20,000 / 48

= 7200 + 20,000 / 48

= 27,200 / 48

= $566.67 per month.

2. Calculate monthly payment base on loan period

Let’s say:

Loan amount = $50,000

Interest Rate (IR) = 6.0%

Term = 6 years

Total financed month = 72 months

Monthly Payment = (Loan amount x IR x Term) + Loan amount / Total financed month

= (50,000 x 6.0% x 6) + 50,000 / 72

= (3000 x 6) + 50,000 / 72

= 18000 + 50,000 / 72

= 68,000 / 72

= $944.44 per month.

Car payment calculator

There are too much of online calculators available in the internet. Here we would to recommend an online calculator from bankrate.com, please click here.

5 things to know how to calculate car payment

  • It is better not to make the monthly car payment take away 1/3 of your monthly salary.
  • Always reserve some backup cash just in case you lost your job, and you still able to pay the car loan at least 3 months.
  • Do not too optimistic when calculate your monthly budget, always give yourself extra buffer or allowance.

After you know what is your budget for car loan, you may want to find out about GMAC car loan account. It will be good for you to calculate your own financial budget after you have learnt how to calculate the monthly car payment.


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