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Everything you need to know about auto loan payments

This Auto Loan Payment Calculator helps you estimate what you'll pay each month for a car loan, how much interest you'll pay over the life of the loan, and the total cost including taxes and fees if you provide them. Below you'll find the formula used, a step-by-step example, practical tips to lower payments, and a full amortization schedule you can inspect or print.

How the calculator works — formula and explanation

The monthly payment for a fixed-rate loan is calculated using the standard amortizing loan formula:

Monthly Payment = P × r × (1 + r)n / ((1 + r)n − 1)

Where:

  • P = principal (the loan amount after down payment and trade-in)
  • r = monthly interest rate (annual rate ÷ 12, in decimal form)
  • n = total number of monthly payments (loan term in years × 12)

Inputs you should provide

  • Vehicle price: The sticker or negotiated price of the car.
  • Down payment & trade-in: Any amount you pay upfront or trade-in value reduces the financed amount.
  • Loan term: Length of loan in years (common terms: 36, 48, 60, 72 months).
  • Interest rate (APR): The annual percentage rate from the lender.
  • Extra monthly payment (optional): Any extra monthly amount you plan to add toward principal to pay off early.

Example: Walkthrough

Suppose you buy a car for ₹12,00,000, make a down payment of ₹2,00,000, finance the remaining ₹10,00,000 at an APR of 8% for 5 years (60 months). The monthly interest rate r = 0.08 / 12 = 0.0066667, n = 60.

Plug into the formula to get the monthly payment. Using the calculator below you can enter these values and click Calculate to see the results automatically.

Why amortization matters

Early in the loan, a larger portion of your payment goes to interest and less to principal. As you pay down principal, interest portion decreases. If you add extra monthly payments toward principal, you reduce the loan balance faster, cut total interest paid, and shorten the loan term.

How to use this calculator — tips and best practices

  • Shop for APR: Even a small difference in APR changes your monthly payment and total interest significantly.
  • Consider shorter terms: 36–48 month loans have higher monthly payments but much less total interest than 60–72 month loans.
  • Put more down: A larger down payment reduces principal and may qualify you for better APRs.
  • Watch total cost: Factor in insurance, taxes, registration, and maintenance in your monthly budget.

Common questions (FAQ)

Will making extra payments always save interest?

Yes, extra payments applied to principal reduce the outstanding balance and decrease interest accrual going forward. Check your loan agreement for prepayment penalties — most consumer auto loans don't have them, but it's good to confirm.

Is APR the same as interest rate?

APR (Annual Percentage Rate) typically includes certain fees and represents the yearly cost of borrowing, expressed as a percentage. The interest rate is just the nominal rate used for calculating interest. Use the APR when comparing lenders.

Is a longer loan term better?

Longer terms lower monthly payments but increase total interest paid. They can be useful if monthly cash flow is tight, but you'll pay more over the life of the loan.

Conclusion

This Auto Loan Payment Calculator is designed to be simple but robust: estimate monthly payments, compare terms and rates, and experiment with extra payments to see how much you can save. Use the amortization schedule to understand the payment breakdown and plan your finances.