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How can I calculate a car loan with the down payment?
I’ve been searching for a new car over the last few weeks, and now that I’ve found one, I need to take out a car loan. I’ve gotten rates from multiple lenders, but how can I calculate the total cost, including the down payment, to compare offers? The best offer I’ve gotten so far has been for a 60-month $30,000 loan with a 7.8% interest rate and a $10,000 down payment. The car itself is $40,000.
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m happy to hear you’ve found a car you want and compared rates from multiple lenders to find the best
car loan
offer!The good news is that calculating a car loan with the
down payment
is a relatively simple process because your down payment doesn’t change or accrue interest. To calculate the total cost, you can use an online car loan calculator or calculate it by hand using:
A = P x r(1+r)n(1+r)n -1Where:
- A is the monthly payment
- P is the principal or amount borrowed
- r is the monthly interest rate expressed as a decimal
- n is the term in months or number of payments
To calculate the total cost using the information provided:
- Divide the interest rate as a decimal, .078, by 12 to get the monthly interest rate of .0065.
- Replace the variables with your values and solve using order of operations.
- Multiply A, the monthly payment of $605.42, by the number of months, 60 to find the total cost of payments, which is $36,325.20.
- Add your down payment, a fixed cost, to find the total cost of $46,325.20.
Once you’ve secured your loan and are preparing to sign the paperwork, you’ll also need
full coverage car insurance
.If you want to ensure you’re not overpaying for coverage, use the
Jerry
app. Jerry compares quotes from over 50 top insurance companies. Once you make a selection, Jerry will handle all the phone calls and paperwork so that you don’t have to. View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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