Simplified guide in calculating a car loan rate

The car loan’s Annual Percentage Rate or (APR) determines the amount that you would be paying for the monthly and yearly interest. The calculation of the car loan rate is an easy task and could possibly be accomplished by using a free online calculator offered by most websites or by using a manual calculator. As soon as you know the rates involved in your car loan would have a better understanding whether you can afford these payments or not.

Car loan rate calculation using an online calculator

  1. Search for an online car loan calculator using the internet. Websites such as,, and have calculators that could help you determine the APR of your current vehicle loan. All you need to do is log on to any of these sites and click the buttons for “Calculators,” “Loan Calculator” or “Loan APR.” Upon clicking this, the calculator page would automatically be displayed.
  2. Provide the needed and appropriate information in fields allotted for information such as the amount of the car loan amount, the loan term, and the interest rate tied to the loan.
  3. After providing the needed information, click the button that enables the “Calculate” function in order to obtain the needed results. The monthly as well as the annual payments for the loan would then be displayed together with the APR and the final cumulative loan amount.

Car loan rate calculation using a manual calculator

1. In case you would be calculating the car loan rate using a manual calculator, you have to use the standardized equation. The standardized equation for calculating this is:

i = 2 x n x I / P(N + 1)

Where:  i is the APR

n is the number of payments in a single year

I is the total financing charges

P is the amount of borrowed

N is the number of scheduled payments

This specific equation would help you determine the loan’s APR.

2. Using this formula, substitute the letters with appropriate amounts involved in your car loan. For example: i = 2 x 12 x $900 / $15,000 (6 + 1) = $21,600 / $105,000.

3. Calculate the APR of your car loan based on the formula and using the example above the calculation would be i = 2 x 12 x $900 / $15,000 (6 + 1) = $21,600 / $104,000 = 20.7 percent. Given this, you will be paying for 20.7 percent for the loan’s interest.

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