Muller Honda Pre-Owned

How to Calculate the Interest Rate on a Car Loan

Man Calculating Finances

Chicago car shoppers trying to figure out how to calculate auto loan interest — you’re in luck. Muller Honda Pre-Owned is here to go over the ins-and-outs of how to figure interest on a car loan. Once you’ve learned how to calculate interest rate on a car, fill out a pre-approval and browse through our inventory.

What is an Interest Rate?

When learning how to figure the interest on a car loan, Highland Park drivers will need to know some of the basic jargon before they proceed. For starters, interest is the fee you pay the lender to loan you money. It’s usually a percentage of the principal amount, and your payments will go both towards paying off the principal and the interest. Here are some other useful terms to know:

  • Principal Amount: This is the dollar amount you’re looking to borrow, minus interest.
  • Loan Term: This is the length of time you’re committing to to pay off your loan. Longer loans have lower payments and more interest. Shorter loans have larger payments but less interest.
  • Repayment Amount: This includes the principal and the interest in one sum.

How to Calculate Auto Loan Interest for First Payment

When Arlington Heights drivers attempt to figure out how to calculate auto loan interest for their first payment, they can just do the following calculation:

  1. Divide the total principal of the loan by the total interest listed on your loan contract.
  2. Multiply the figure you get with the total principal, and you’ll have the interest for your first payment.

How to Figure Interest on a Car Loan Going Forward

When determining how to calculate interest on a car loan in the future, you’ll simply need to:

  1. Deduct the interest you calculated from that first payment you just paid, and then subtract the figure you come up with from the total principal. This will give you the remaining balance of your principal.
  2. Take the percentage rate you got when you did your first month calculation and multiply it by the new total principal.

Get Expert Financing Help at Muller Honda Pre-Owned

If you’re struggling with the steps of the car buying process, that’s okay. Most Gurnee car shoppers do. Don’t hesitate to give the finance department at Muller Honda Pre-Owned a call at (847) 831-4100 or check out our car buying tips for more helpful reads about everything from how to lease with bad credit to how to negotiate for a lower interest rate on a loan. And of course, if you’re still struggling with how to figure out how to calculate the interest rate on a car, we can walk you through that over the phone.

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(847) 831-4100

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150 Skokie Valley Road • Highland Park, IL 60035

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Muller Honda Pre-Owned

150 Skokie Valley Road Highland Park, IL

Phone: (847) 831-4100


Phone: (847) 831-4100

150 Skokie Valley Road Highland Park, IL
42.1553485 -87.8048283
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Muller Honda Pre-Owned
Muller Honda Pre-Owned
150 Skokie Valley Road
Highland Park, IL, 60035 US
(847) 831-4100
Muller Honda Pre-Owned 42.1553485, -87.8048283.