![]() This is your stated interest rate, usually listed as your APR, divided by 12. i" represents your monthly interest rate.So, if you have a standard, 6-year loan, this would be 6 six years * 12 months per year, or 72. "n" represents the total number of monthly payments over the life of the loan.As previously discussed, this is what you will pay for your car after rebates, trade-ins, and your down payment. This is what the formula will be calculating. ![]() In order to calculate the amount of simple interest you will pay, you’ll first have to calculate your monthly payment using this formula: M = P ∗ i ( 1 + i ) n ( 1 + i ) n − 1 X Research source The vast majority of car loans use simple interest. Understand how to calculate total interest. You pay $3,000 as a down payment, and trade in a car valued at $5,000. The manufacturer provides a $2,000 rebate.
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