How to Calculate Total Interest Paid on a Car Loan

Everyone wants to own a car in the modern era. Now days it is a status symbol for a family to be the owner of an automobile, especially car. With the daily living costs increasing and prices of commodities skyrocketing, purchasing a car is not easy. Many banks offer car loans to their customer and help them in achieving their dream. At the same time as a common person who pays the taxes regularly, you must keep in mind that the lender will try to take a higher rate of interest. There will be monthly installments known as EMIs. Try to make the deal where you pay the lowest interest rate, making the process of calculating the interest on car loan easier.

How to Calculate Total Interest Paid on a Car Loan How to Calculate Total Interest Paid on a Car Loan

Steps

Know your resources properly. Purchase the car that you can afford. Calculate beforehand the amount of interest you will be able to pay.

Establish the time in which you will have to make full payments against the loan taken. Moreover, determine whether you will be able to do it in the time given to you or not.

Calculate the total amount of payments, which you are, required to pay every month and the amount that you will get will be the EMI, Every Month Installments. You multiply the sum by the actual amount of the loan taken, which you have to pay to the bank.

Subtract the amount obtained in the abovementioned step and multiply it by the number of payments. The final answer you get is the total amount of interest you will be paying for the car loan taken from the bank.

Keep in mind that if the dealer pays the down payment then you also have to reduce the amount from total cost of the car, and you will get the principal loan amount.

If you are aware of the interest but do not know the precise payment, then you can use the online calculator and make the process less complicated.

Tips

Finding the percentage of interest will be an advantage. You can find that by referring to the loan papers given to you by the lender. The terms and conditions section would contain information on “percent interest.”

Make sure that you understand the terminology of the moneylender as a difference in opinion could lead to problems later.

If calculating loan becomes difficult, then you can download an excel sheet from the Internet.

Warnings

Make sure that the bank or the lender is an authorized and a legal entity.

Read all the documents properly before signing the form and sort out all queries before hand. Feel free to get your doubts clear by the lender.


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