Car Loan Interest Calculator
Calculate the exact total finance charges on your auto loan, analyze the interest-to-principal ratio, and see how much interest is front-loaded in the first year.
Loan Finance Charge Inputs
Interest equals 20.2% of principal borrowed
Cumulative Loan Finance Charge Formula
Total Finance Charges = (Monthly Payment ร Loan Term in Months) โ Loan Principal Amount- Simple Interest Compounding: Monthly interest is calculated as (Outstanding Principal ร APR) / 12.
- Front-Loading: Because principal is largest early in the loan, month 1 interest charges are significantly higher than month 48 interest.
Step-by-Step Worked Example
Calculation Steps:
- Monthly Payment = $500.95
- Total Repayment Amount = $500.95 ร 60 = $30,057.00
- Total Finance Charges Paid = $30,057.00 โ $25,000.00 = $5,057.00
- First Year Interest Paid = $1,712.50 (33.9% of all interest paid in year 1 alone)
How to Use This Calculator
- 1Enter the loan amount you plan to borrow.
- 2Input the annual percentage rate (APR) and term duration.
- 3View the total interest cost, monthly payment, and front-loaded interest breakdown.
Assumptions & Limitations
- Assumes a standard simple-interest amortizing auto loan with on-time monthly payments.
Frequently Asked Questions
Why is interest on car loans front-loaded?
Auto loans use simple interest amortization. Because interest is charged on the remaining balance, you pay the most interest in the first year when the balance is highest. As you pay down principal, the monthly interest portion declines.
Related Cost Calculators
Auto Loan Calculator
Calculate monthly auto financing payments, total interest, and amortization with trade-ins and fees.
Car Payment Calculator
Calculate monthly loan payments from vehicle price or reverse-engineer affordable car price from budget.
Auto Loan Payoff Calculator
Calculate interest savings and months shaved off your auto loan with extra monthly payments.