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Maybe you’ve recently applied for an automotive loan in Roseville. Maybe you’re trying to get approved for a new car loan in Sacramento but you want to learn more about loans in general. Either way, our finance experts here at Sacramento Chrysler Dodge Jeep Ram can help explain the important aspects of a car loan to you and even help you calculate the interest on a car loan. If you have any questions along the way, just contact us and we’ll be more than happy to help you learn the various aspects of how car financing works!
When trying to figure out how to calculate the interest rate on a car loan, first, you’ll need to know what exactly interest is what determines an interest rate.
If you choose to finance the cost of buying a car instead of paying cash outright, the lender who holds your loan owns your vehicle until it is paid off. You can think of a car loan interest rate as a fee you pay the lender to use their money to buy your car.
How much you wind up paying for an interest rate is based on a variety of factors, including:
If you’re deciding how to calculate your car loan interest for the initial payment only, just use this easy calculation:
This calculation should result in a numerical figure for the interest amount you’ll pay on your first car payment!
Once you have begun to pay down your initial principal you will need to calculate your new balance to configure the interest you’ll pay going forwards. Here’s the calculation to follow for that amount:
While rounding and human err may impact the total you calculate, the above processes should give you a good means of how to calculate the interest rate on a car loan.
Here at the Sacramento Chrysler Dodge Jeep Ram finance center, we can answer all your questions about car loans and leases. Looking for more basic information on how your interest rate will impact your monthly car loan payment? Just explore our online monthly payment calculator. For anything else, feel free to give us a call at (916) 229-8912!
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