How to Calculate the Interest Rate on a Car Loan

Loan application
All vehicle loans in the Marrero area charge interest, but how much does your interest rate end affect your monthly payments? Learn how to calculate the interest rate on a car loan with help from the finance team at Ray Brandt Chrysler Dodge Jeep Ram.


What is an Interest Rate?

When you’re figuring out how to calculate interest on a new car, it’s important to understand more about interest rates themselves. When you buy a car on credit, your Gretna-area lender is the true owner until the entirety of your loan is paid out. Your interest rate is the cost you pay to use your car before it’s entirely paid out. The interest rate you pay is based on a variety of factors, including:

  • Repayment Amount: With every car loan payment you make, a portion goes to interest and a portion goes to repay your principal.
  • Principal Amount: The principal amount is the dollar amount you are looking to borrow.
  • Repayment Schedule: Most car payments are done monthly, but if you can make payments more often it could save you money over time. Thanks to compounding, when you make more payments you pay less interest.
  • Loan Term: This term means the length of time you will be repaying the loan. In general, shorter loan terms equal higher repayments, but less interest paid in the long run. With longer terms, you generally have lower monthly payments, but end up paying more in the long run.

How to Calculate Auto Loan Interest for First Payment

When discovering how to calculate auto loan interest for the initial payment you can use this quick calculation:

  1. Divide your interest rate by the total number of payments per year.
  2. Multiply your interest rate by the balance of your loan to see how much interest you pay in your first month.
Using a calculator

How to Figure Interest on a Car Loan Going Forward

Once you’ve started paying off your initial principal, you’ll need to calculate your new balance to see how much interest you’ll end up paying in the following months. To do this:

  1. Subtract your previously-calculated interest from the payment you just made. You’ll be left with the amount that you have paid off the loan principal.
  2. Deduct this total from your original principal to get your new loan balance.

Always remember that this is just a rough estimate that involves rounding and human error. Be sure to contact us for any assistance!

Figuring out finances

Get Help From the Financial Professionals at Ray Brandt Chrysler Dodge Jeep Ram

Are you feeling overwhelmed wondering how to figure interest on a car loan? Do you have additional financing questions for our experts at our Harvey dealership? They can walk you through every aspect of how to calculate interest on a car or even financing a car with bad credit at Ray Brandt Chrysler Dodge Jeep Ram. You can also check out our online monthly payment calculator before you stop by our dealership near New Orleans!


More From Ray Brandt Chrysler Dodge Jeep Ram

  • Our Founder Being Honored At The Children’s Hospital Sugar Plum Ball

    This past Saturday night, Mrs. Brandt along with her family, Ray Brandt Auto Group leaders and friends, attended the annual Children’s Hospital Sugar Plum Ball at the Fillmore at Harrah’s Casino.  With an Alice in Wonderland theme, the evening was hugely successful for the hospital and was especially meaningful as the Ray and Jessica Brandt…

  • 2020 Jeep Gladiator Reviews

    Jeep truck reviews are always packed with praise for the brand’s rugged engineering and durable performance, and the 2020 Jeep Gladiator review is no exception. The latest Gladiator is a powerhouse with plenty of style for the Marrero roads. What makes this vehicle stand out from the competition? View Gladiator Inventory Contact Us Jeep Gladiator…

  • 2020 Jeep Wrangler Configurations

    Available in eight distinct trims, the 2020 Jeep Wrangler has arrived at Harvey-area dealerships! With so many choices, Harvey drivers can find the perfect balance of rugged performance and comfort for everyday drives. Read our guide below to explore each of the Jeep Wrangler configurations in detail, and then browse our new Wrangler inventory to…

Saved
Saved Vehicles

SAVED VEHICLES

You don't have any saved vehicles!

Look for this link on your favorites:

Save

Once you've saved some vehicles, you can view them here at any time.

Contact
Contact Us

504-930-8154

Call Now

1660 Westbank Expy • Harvey, LA 70058

Get Directions

Today's Hours:

Sales: Closed

Service: Closed

Parts: Closed

Ray Brandt Chrysler Dodge Jeep Ram 29.9012767, -90.0672041.