How to Compute Vehicle Interest Rates

The interest rate on your car loan determines your monthly payment and how much of each payment goes toward interest. Your interest rate is based on your credit score and the state of the financial sector when you take out the loan. Your lender tells you your interest rate when you first get your loan, but if you forget it, you can calculate it later based on information on your monthly statements.

Instructions

1

Subtract the outstanding balance on your most recent auto loan statement from the balance on your previous monthly statement. This gives you the amount of your payment that went toward the principal balance during that month.

2

Subtract the answer in Step 1 from the amount of your monthly car payment. This answer is the amount of interest you paid that month.

3

Divide the amount of interest from Step 2 by the outstanding principal balance on the older monthly statement. For example, say you paid $65.50 in interest on a balance of $9,247. The result is 0.00708, which is your monthly interest rate expressed as a decimal.

4

Multiply the monthly interest rate by 1,200 to find the annual interest rate as a percent. In this case, it is 8.5 percent.