How Do I Calculate Car Loan Financing on My Calculator?

Unless you have enough money to pay for a car in full, you will need to get a car loan with monthly payments. Although a lender will tell you what the loan's monthly payments are before you sign the documents, you can calculate them yourself on a basic calculator. This helps you test different loan amounts, interest rates and loan terms to find the monthly payment that best fits your budget.

Instructions

1

Multiply the number of years in the loan term by 12 to find how many monthly payments the car loan will have. For example, if you are planning to get a five-year loan, multiply 5 times 12 to find you will have 60 monthly payments.

2

Divide the annual interest percentage for the car loan by 100 to express it as a decimal. Then divide the decimal rate by 12 to calculate the monthly interest rate. For example, convert an 8 percent rate to 0.08, and then divide it by 12 to get 0.00667 as the monthly interest rate.

3

Add 1 to the monthly interest rate. In this example, you get 1.00667.

4

Raise this number to the negative power of the number of monthly payments you figured out. For example, if you have 1.00667 in your calculator, press the "^" symbol and enter "-60" to raise it to the negative 60th power. In this case, the answer is 0.671.

5

Subtract the previous answer from 1. In the example, you have 1 minus 0.671, or 0.329.

6

Divide the monthly interest rate by the previous answer. For example, 0.00667 divided by 0.329 gives you 0.0203.

7

Multiply the previous answer by the total amount borrowed on the car loan. If you were going to borrow $15,000 for a car, multiply that by 0.0203 to find the monthly payment is $304.50.