March 28, 2023

If you’re in the market for a new car, you’re probably also considering taking out a car loan to finance it. This can be a great way to get into your dream car without saving money. But before you sign any paperwork, it’s essential to understand how your monthly repayments will be calculated. In this blog post, we’ll walk you through the process step-by-step, so there are no surprises when it comes time to start making payments.

What You Should Consider First

Before calculating the loan repayments, you need to get information about car financing. Get a worksheet with the loan amount, interest rate, and term length. Find out how much you will be required to pay monthly and the total amount you will repay over the life of the loan.

Also, get the overall car and registration value. This will entail looking into different cars and comparing their features and prices. Find something that’s affordable and has the features you’re looking for.

Once you have all this information, you’re ready to start calculating your monthly loan repayments.

The Formula You Need to Know

Your monthly repayment will be determined by the amount of money you borrow, the interest rate, and the length of time you have to repay the loan.

Formula I= P*R*T

I= Interest

P= Principal

R= Interest rate

T= Loan length

For example, let’s say you’re taking out a $15,000 loan with a 4% interest rate and have to repay it over 48 months. Plugging those numbers into the formula, we get:

I= $15,000*0.04*48

I= $2,880

Now, to calculate your monthly repayment, we need to divide that number by the number of payments you’ll make over the life of the loan. In this case, it would be 48 payments.

$2,880/48= $60

So, your monthly repayment on this loan would be $60.

Use an Online Car Loan Repayment Calculator

Using an online car loan repayment calculator, you can skip the loan repayment maths. All you need to do is enter the loan amount, interest rate, and loan term, and the calculator will do the rest.

Some loan calculators will also let you compare different loan options side-by-side. This can be helpful if you’re trying to decide between two or more loans and want to see which one will have the lower monthly repayments.

Analyze the Gathered Information

The monthly repayment is not the only thing you should consider when taking out a car loan. You also need to make sure that you can afford the loan itself. Look at the total amount you’ll repay over the life of the loan and make sure it’s something you’re comfortable with.

Remember Car Insurance Costs

Once you’ve decided on a loan and have started making monthly repayments, don’t forget about car insurance. This is an essential part of owning a car, and it can be costly if you don’t factor it into your budget.


Calculating your monthly car loan repayments is simple when you know the formula. Just remember to also factor in the cost of car insurance so that you’re not caught off guard later on.