Car Payment Calculator With Interest

Auto Loan Interest Calculator | Gybird Motors Kenya

Gybird Motors has made this car finance interest rate calculator available to you to help you have a clear picture of your loan repayment and make a better decision about your car choice. This vehicle interest calculator is used as a used car loan interest rate calculator or even a car finance APR calculator.

An auto interest calculator helps answer most of your questions about car payment plans for Kenya loans.

Simply enter the car price, the deposit, the interest rate for car loan, and the duration in months, and you will get a breakdown of all the payments until your loan is fully paid.

How Car Loan Rate Calculator Works

This Auto Loan Rate Calculator helps you determine your monthly payments and total loan cost using Equal Total Payment (Amortized Payment). It’s a method where your monthly payment remains the same, but the portions allocated to principal and interest change over time. Here’s how it works:

1. Key Terms

• Loan Amount: The total amount of money you're borrowing.
• Loan Term (Months): The number of months you'll take to repay the loan.
• Loan Rate (% per year): The annual interest rate charged by the lender.

2. Equal Total Payment Method

With this method, every month, you pay:

• A fixed total payment that stays the same each month.
• The portion that goes toward the principal increases each month.
• The portion that goes toward interest decreases as the loan balance decreases.

3. Step-by-Step Calculation

a. Monthly Interest Rate

Since the loan rate is given annually, you must divide it by 12 to calculate the monthly rate. For example, if the loan rate is 6% per year, the monthly rate is:

Monthly Rate = 6 ÷ 100 ÷ 12 = 0.005 (or 0.5% per month)

b. Fixed Total Payment

To calculate the fixed total monthly payment, we use the following amortization formula:

Monthly Payment = P × r ÷ (1 − (1 + r)⁻ⁿ)

Where:

• P: The loan amount.
• r: The monthly interest rate (0.005 for 6% annual rate).
• n: The loan term in months.

For example, if you borrow $12,000 for 12 months at a 6% annual interest rate, the fixed total monthly payment would be approximately $1,033.

c. Principal and Interest Calculation

Each month, your payment is divided into:

• Interest: Calculated by multiplying the remaining balance by the monthly rate.
• Principal: The remainder of the payment after deducting the interest.

For example:

Interest = 12,000 × 0.005 = 60

The remaining $973 from your $1,033 payment goes toward the principal.

Interest = 11,027 × 0.005 = 55

The remaining $978 from your $1,033 payment goes toward the principal.

• In Month 1, if your loan is $12,000, the interest would be:
• In Month 2, your remaining balance is $11,027, and the interest is:

d. Total Monthly Payment

In this method, your total monthly payment remains the same throughout the loan term:

For example, every month, your total payment is $1,033, which includes both interest and principal. The interest decreases each month as the remaining balance decreases, and the principal portion increases to make up the difference.

4. What Happens Over Time?

• The principal repayment increases monthly as more of your fixed payment goes toward reducing the loan balance.
• The interest decreases over time as the remaining loan balance decreases.
• Your monthly payment remains constant at $1,033, but it’s divided between principal and interest changes.

5. Final Totals

By the end of the loan term, you will have paid:

• $12,396 in total payments.
• $11,999 toward the principal.
• $390 in interest.

Our calculator adds up all the payments to give you a clear summary of your loan repayment.