Car Loan Monthly Payment Calculation

How can you calculate the monthly payment for a car loan with an APR of 6.27 percent, compounded monthly for 7 years with the first month?

Given the car price is $31,000, what is the formula to determine the monthly payment amount?

Calculating Monthly Payment for Car Loan:

The formula to calculate the monthly payment for a car loan is M = P * (r * (1 + r)^n) / ((1 + r)^n - 1), where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate, and n is the total number of monthly payments.

Explanation:

When you are looking to buy a car and need a loan, it's crucial to calculate the monthly payment amount accurately. In this case, with a car price of $31,000, an APR of 6.27 percent compounded monthly for 7 years, you can use the formula mentioned above to determine your monthly payment.

To calculate the monthly payment, plug in the values into the formula: M = $31,000 * (0.0627/12 * (1 + 0.0627/12)^(7*12)) / ((1 + 0.0627/12)^(7*12) - 1)

By solving the equation, you will find that the monthly payment for this car loan will be approximately $494.42.

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