How Is a Car Loan Payment Calculated? Formula & Examples
Car loans are usually repaid by equal installment or equal principal. This guide gives the formula and shows how price, down payment, term and rate affect the monthly payment.
The loan principal is generally = vehicle price − down payment. Down payment ratios commonly range from 20% to 50%, subject to the lender’s requirements.
Equal installment: a fixed monthly payment, good for a stable income and predictable budgeting.
Equal principal: a fixed principal portion each month with interest falling as the balance drops — higher early payments but usually lower total interest.
Enter the price, down payment, term (e.g. 36 months) and annual rate to see the monthly payment, total interest and total cost at once.