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Used Car Loan Payment Formula:
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The used car loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term. It accounts for the principal amount, interest rate, and loan duration.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that pays off both principal and interest.
Details: Accurate payment calculation helps borrowers understand affordability, compare loan offers, and budget for their vehicle purchase.
Tips: Enter the loan amount in dollars, monthly interest rate as a percentage (e.g., 5.5% as 5.5), and loan term in months. All values must be positive numbers.
Q1: How is used car loan different from new car loan?
A: Used car loans typically have higher interest rates and shorter terms than new car loans due to higher risk.
Q2: What's a typical interest rate for used cars?
A: Rates vary but generally range from 4% to 20% depending on credit score, age of car, and loan term.
Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid over the life of the loan.
Q4: Should I include down payment in principal?
A: No, principal should be the amount you're borrowing after any down payment or trade-in value.
Q5: Are there other costs not included here?
A: Yes, this doesn't account for taxes, fees, or insurance which may be included in your actual payment.