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How can I figure out the interest rate on my car loan?
I’m applying for a car loan and I want to know how much interest I would be paying on that first payment before I make it. Is there any way I can figure this out?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A car loan is a huge financial decision, so it’s a good idea to know your loan terms and payments inside and out before you sign. If you want to figure out the interest rate on your potential car loan’s first payment, you’ll need to follow these instructions:
- Divide your given interest rate (the one on paper) by the number of monthly payments.
- Multiply that monthly payment by your loan balance–or in this case, the principal amount since you haven’t made any payments yet.
- The resulting amount is what you will pay in interest on your first payment.
If you find that you’re unhappy with the amount of interest you’re asked to pay, take some extra time to shop around for other options. And keep in mind that even if your loan agreement is not as favorable as you’d hoped, you don’t have to stick with it forever. As your credit score increases, you’ll have the ability to
refinance your loan
for more favorable terms.When that time comes, the
Jerry
app can help. In addition to helping drivers get the lowest prices for the best car insurance
coverage out there, Jerry also offers auto loan refinancing services. Jerry can provide you with competitive quotes in under a minute and will take care of all the paperwork and phone calls so you don’t have to.View full answer
- Gregory R.
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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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