3
ADDED TO MY GARAGE
VIEW MY GARAGE
Your garage is empty.
Save some vehicles to get started!

How to Calculate Interest Rate on a Car Loan

Hands Doing Calculations with Calculator
When you take out an auto financing loan in Harvey, interest payments are added to the total amount you pay. If you’re unsure about how to calculate interest rate on a car loan, it can be hard to estimate your monthly payments. In the guide below, the Ray Brandt Kia auto finance experts show you how to calculate auto loan interest on your next vehicle purchase — so you can get financing ASAP!

What Are Interest Rates?

Before we dive into the details of how to figure interest on a car loan, let’s define an interest rate. When you finance a car, you’re buying it on credit. Your lender — whether a national bank or Marrero credit union — is actually footing the bill. Interest is essentially a fee you pay for the right to buy a car with money you don’t yet have. Knowing how to calculate interest rate on a car means getting familiar with the financing process and the factors that influence interest rates:

  • Principal Amount — The principal is the full dollar amount you intend to borrow.
  • Loan Term — The loan term is the length of time you will be paying on your car loan. In general, a shorter loan term means higher monthly payments but less interest paid overall. Longer loan terms will lower your monthly payments, but you’ll pay more in interest over time.
  • Repayment Schedule — You will owe a car loan payment once each month, but it’s possible to pay more often when you can. Getting ahead on your loan repayments is a great way to reduce your total interest payments.
  • Repayment Amount — When you make a loan payment, part of it pays toward your principal, and part of it pays toward your interest.

How to Calculate Auto Loan Interest for Your First Payment

Curious about how to calculate auto loan interest the easy way? Just use the following formula to figure out the amount of your first payment:

(interest rate ÷ number of monthly payments per year) x present loan balance

How to Figure Interest on a Car Loan Moving Forward

Your interest rate will change as you make repayments on your loan. Here’s how to calculate interest rate on a car after you’ve begun to pay toward your principal:

  1. Take the interest you just calculated above, and subtract it from your most recent payment amount: previous interest – most recent repayment amount.
  2. Next, subtract this amount from your original principal to find your new loan balance.

Knowing how to calculate auto loan interest yourself will help you stay on top of your finances and budget, but don’t hesitate to call our finance center with any questions. Our finance experts are happy to help!

Auto Finance Questions? Ask Us Anything at Ray Brandt Kia!

If you’re not confident about how to figure interest on a car loan on your own, our friendly finance team in Harvey can provide all the auto financing info you need. Give us a call for tips on getting a good interest rate, financing with damaged credit in New Orleans, and much more.

More from Ray Brandt Kia

  • 2021 Kia Sorento Trim Levels

    Are you searching the Harvey auto market for an SUV that can reinvigorate your automotive experience? If so, the new Kia Sorento should be at the top of your list. With five trims to choose from, finding an SUV that matches your budget and lifestyle is a breeze when you make the switch to the…

  • 2021 Kia Telluride Configurations

    If you’re looking for an upscale SUV that offers endless luxury and utility, the new Kia Telluride should be at the top of your list. This brazen model makes no sacrifices, delivering deluxe amenities, plenty of interior space, advanced tech, and innovative safety features. The 2021 Kia Telluride is built for any challenge, offering a…

  • 2021 Kia Forte MPG Ratings and Powertrains

    If you’re like a lot of our Harvey customers, you don’t want to have to empty your bank account just to keep your gas tank full. You won’t have to worry about that with the 2021 Kia Forte fuel economy. The EPA estimates you can expect the 2021 Kia Forte‘s gas mileage to reach up to…

Saved Vehicles

SAVED VEHICLES

You don't have any saved vehicles!

Look for this link on your favorites:

Save

Once you've saved some vehicles, you can view them here at any time.

Contact Us

504-356-7072

Call Now

1884 Westbank Expy • Harvey, LA 70058

Get Directions

Today's Hours:

Open Today! Sales: 9am-6pm

Open Today! Service: 7:30am-3pm

Ray Brandt Kia 29.9007548, -90.0696402.