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How do I know how much interest I'm paying on a car loan?
I just signed my first car loan and while I know the interest rate, I'm not sure how much interest I'm paying per month or overall. Where can I find the amount of interest I’m paying on my car loan overall?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Knowing how much interest you’re paying on your car loan is important, and is luckily very easy to figure out. The best way to know how much you’re paying on interest for a
car loan
is to use an online auto loan calculator. Simply enter your principal (purchase price), the interest rate, and the length of the loan. The calculator will then tell you how much interest you’re paying over the life of the loan.
However, you can’t simply divide total interest by the number of months in the loan because your interest is based on the principal each month. Therefore, the longer you pay, the more of your payment goes toward the principal than interest.
If you want to find out how much interest you’re paying each month to the penny, take a look at an amortization schedule. You can get this online or from the lender and see exactly how much is going toward the principal or interest each month. Note that the interest will also change if you make principal-only payments or you double up on payments each month.
In the future, you can save money to pay down your loan by shopping around for car insurance during each insurance renewal. To make the comparisons easy, use the
Jerry
app. We’ll get you personalized quotes in minutes so that you can get the best coverage at a great price—and if you find a plan you like, we’ll help you switch over!Best of luck with your loan!
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- Gregory R.
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