Monthly Car Loan Payment Calculation: 100,000 Loan Over 3 Years

How to Calculate Monthly Payment

To determine the monthly payment for a car loan, you need to use the following formula:

Monthly Payment = (Loan Amount Interest Rate) / (1 - (1 + Interest Rate)^(-Number of Months))

where:

Loan Amount is the total amount you are borrowing

Interest Rate is the annual interest rate expressed as a decimal (divide the percentage by 100)

Number of Months is the number of months over which you are repaying the loan

Example: 100,000 Loan Over 3 Years

Let's say you are taking out a car loan for 100,000, and the interest rate is 5%. Over 3 years, the number of months is 36.

Using the formula:

Monthly Payment = (100,000 0.05) / (1 - (1 + 0.05)^(-36))

Monthly Payment = 3,096.22

Therefore, your monthly payment would be 3,096.22.

Factors Affecting Monthly Payment

The monthly payment for a car loan is affected by three main factors:

Loan Amount: A higher loan amount will result in a higher monthly payment.

Interest Rate: A higher interest rate will increase the monthly payment.

Loan Term: A shorter loan term will result in a lower monthly payment but higher interest costs overall. Conversely, a longer loan term will have a higher monthly payment but lower interest costs.