# Car Finance Calculator

If you're looking to finance a new car purchase, or re-finance an existing vehicle loan, use this car loan calculator tool to work out the monthly repayment figures. Simply enter the vehicle value, the annual interest rate (percentage), the number of years and any initial deposits or end balloon payments.

#### Disclaimer

Whilst every effort has been made in building the car loan calculator tool, we are not to be held liable for any special, incidental, indirect or consequential damages or monetary losses of any kind arising out of or in connection with the use of the calculator tools and information derived from the web site. This tool is here purely as a service to you, please use it at your own risk.

The calculations given by the car loan calculator tool are only a guide. Please speak to an independent financial advisor for professional guidance. Read the full disclaimer.

## How does the car finance calculator work?

Our calculator helps you fully work out the costs associated with purchasing a car on credit. Once you have entered the amount, the interest rate and the period of the loan, the calculator will display key figures, allowing you to assess the loan. These include the total repayment amount, the total interest and the monthly payments you may have to make.

## How much interest will I pay on my car loan?

Our car finance calculator works out the interest that you might pay as part of your car finance plan. It does this by taking your interest rate and compounding it over the course of the loan period. It is this compounding of interest rate that forms the basis of the effective annual rate we feature in our calculator.

As an additional feature, our car finance calculator breaks down the monthly payments, showing you how much of the monthly payment is for the capital and how much is interest, together with the balance remaining at that point in time. It's important to be aware that interest compounds over time (our compound interest calculator demonstrates this well).

From all of this information you should be able to gauge whether you think it is worthwhile going ahead with the car finance plan or not.

## Why take out a car loan?

When it comes to financing a new car, there are a number of options available to you: outright purchase, personal loan, leasing, hire purchase or dealer financing. It's advisable to read up on the pros and cons of each of these before deciding upon the best one for you. Should you be considering taking out a different type of loan, give our standard loan calculator a try.

## What is a balloon payment?

A balloon payment is a large, lump-sum payment made at the end of a long-term loan. It is commonly used in car finance loans as a way of reducing monthly repayment figures. Be aware that once you reach the end of your loan period, the balloon amount becomes payable. You can learn more about balloon payments in our article, What is a balloon payment?.

## What is the formula for this calculator?

This calculator uses the following formula:

**Monthly payment = [rate + rate / ( (1+rate) ^ months -1) ] x principal car loan amount**

If you have any problems using this car finance calculation tool then please contact me.