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How do I calculate my APR on a car loan?
I’m buying my first car, and I’ve noticed that many lenders quote the APR as the rate of interest you pay. I’m not exactly sure how this is different from an interest rate or how it’s figured. How can I calculate the APR on a car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Knowing the annual percentage rate (APR) and the interest rate of a
car loan
goes a long way to understanding the ins and outs of your loan. To calculate the APR:- Add the fees, taxes, and interest that you’ll owe over the life of the loan
- Take that amount and divide it by the loan amount
- Take that number and divide it by the length of the loan term in days
- Multiply that number by 365
- Multiply the number by 100 to get the APR
If you don’t want to channel your inner mathematician, you can always use an online auto loan calculator, which will calculate the APR and monthly payment based upon the information you input. Remember that the APR will always be slightly higher than the interest rate simply because it includes the fees and taxes added to the original loan amount.
Since you’re buying your first car, APR isn’t the only thing you should look at. Your lender will also require full coverage car insurance, so make sure to shop around and compare rates with the Jerry app.
As a licensed broker,
Jerry
helps you find and compare quotes from more than 50 top providers, including Nationwide, Allstate, and Travelers, in less than a minute. When you find a superb rate, Jerry can help you buy your new coverage and even cancel your old policy!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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