Car Loan APR Calculator

Related Calculators

Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

APR: Annual Percentage Rate, a yearly measure of borrowing cost. It can differ from the stated interest rate because APR can include certain required fees. [2]

Amount Financed: The amount of credit provided for the loan. It is a disclosure value and may not equal the vehicle price. [1]

Monthly payment: The regular dollar payment due each month under the loan schedule.

Number of monthly payments: The total count of regular monthly payments in the schedule.

Finance charge: The cost of credit stated in dollars. This calculator estimates it as total scheduled payments minus Amount Financed. [1]

Percentage point: The direct difference between two percentages. A change from 6.2% to 6.0% is -0.2 percentage points.

Mistake: Entering the vehicle price as Amount Financed.
Fix: Copy the dollar amount labeled Amount Financed from the disclosure or contract.

Mistake: Using a payment that includes insurance, a service plan, or another separate bill.
Fix: Enter only the regular scheduled loan payment from the payment schedule.

Mistake: Entering loan years instead of the number of monthly payments.
Fix: Enter the full monthly payment count, such as 60 for a five-year loan paid monthly.

Mistake: Typing a money amount such as 10,00.
Fix: Enter 10000 or 10,000. Commas must separate groups of three digits.

Mistake: Reading the APR comparison as a percent change.
Fix: Read it in percentage points. For example, -0.2 means the estimate is 0.2 percentage points lower.

Mistake: Expecting an exact match when the first payment date, final payment, or payment amounts differ.
Fix: Use this estimate only for equal monthly payments and check the contract schedule for different dates or amounts.

• This estimate assumes every payment has the same amount, is due monthly, and starts one month after financing.
• A different first-payment date, skipped payment, balloon payment, or different final payment can change the APR calculation.
• The calculator uses Amount Financed and the entered payment schedule. It does not rebuild the loan from vehicle price, trade-in, taxes, add-ons, or individual fees.
• The estimated APR is a nominal annual rate based on a solved monthly rate. It is not a legal finding about compliance with federal or state disclosure rules.
• If total scheduled payments are below Amount Financed, the schedule cannot produce a nonnegative borrowing rate under this model.
• Dollar amounts are rounded for display. Use your loan paperwork for payment due dates and amounts due.

How the estimate is calculated

The calculator finds the monthly rate that makes the entered equal payments repay the entered Amount Financed. It then multiplies that monthly rate by 12 to estimate an annual percentage rate.

Amount Financed = Monthly Payment × (1 - (1 + ρ)^(-Number of Monthly Payments)) / ρ

ρ is the monthly decimal rate. If the total of all payments equals Amount Financed exactly, the monthly rate and estimated APR are both 0, so the calculator uses the zero-rate result instead of dividing by zero.

Estimated Car Loan APR = ρ × 12 × 100

Total of Monthly Payments = Monthly Payment × Number of Monthly Payments

Estimated Finance Charge = Total of Monthly Payments - Amount Financed

Worked example

For $10,000 financed with 12 equal monthly payments of $888.487886783417, the monthly rate is 1%. The estimated car loan APR is 12%, total monthly payments are $10,661.85, and the estimated finance charge is $661.85.

APR comparison

If you enter the APR shown on your paperwork, the calculator subtracts that APR from the estimated APR. A positive difference means the estimate is higher, and a negative difference means it is lower. Truth in Lending disclosures list APR, Amount Financed, Finance Charge, Total of Payments, and payment terms as separate values. [1]

APR difference (percentage points) = Estimated Car Loan APR - APR Shown on Your Paperwork