What Is the Formula for Calculating Car Loan Payments?


Quick Answer

According to FinanceFormulas.net, car loan payments can be determined by using the formula P = r(PV) over (1 - (1 + r) to the power of -n). P is the payment, r is the rate per period, PV is the initial loan amount and n is the number of periods.

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Full Answer

FinanceFormulas.net states that this formula can also be applied to any other loan with a fixed rate, such as a mortgage or business loan, as long as the rate per period and number of periods are consistent. If the loan payments are made monthly, then the number of periods is how many months are required to pay off the loan.

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