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How do you calculate the total interest paid on a car loan?
After seven years and 84 monthly payments, I have finally finished repaying my car loan and have the free and clear title in hand. I never calculated the total interest paid for fear of how expensive it is, but now that it’s paid off, I’d like to know. How can I calculate the total interest on a car loan? It was an 84-month $37,000 loan with a 9.6% interest rate.
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
To calculate the total interest paid on a car loan, you can use an online car loan calculator or calculate it by hand with the equation:
A = P x r(1+r)n(1+r)n -1
Where:
- A is the monthly payment
- P is the principal or amount borrowed
- r is the monthly interest rate as a decimal
- n is the number of payments or term expressed in months
To calculate the total interest:
- Divide the interest rate as a decimal by 12 to get the monthly interest rate of .008.
- Substitute your values for the variables.
- Solve
- Multiply A, the monthly payment of $606.62, by the number of payments, 84 to find the total amount paid, which is $50,956.40.
- Subtract P, the principal of $37,000 from the above value to find the total interest paid, which is $13,956.40.
Finally, now that the
lienholder
is removed from your title, you should review car insurance
policy.To ensure you’re not overpaying for coverage, use the
Jerry
app. Jerry compares quotes from over 50 top insurance companies to find you the best rate and coverage.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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