### What is a car loan?

A car loan is a personal loan, which is used to purchase an automobile. More specifically, a lender loans the money needed to purchase a vehicle to a borrower. In return, the borrower agrees to pay back the lender the amount of the loan plus interest, usually in monthly payments, until the amount owed is fully paid off.

### What are the key components of an auto loan?

**Loan amount**: the amount borrowed from a lender or bank.

**Down payment**: The down payment is an upfront amount of cash paid by the borrower at the time of the purchase of the vehicle. It is usually expressed in terms of a percentage of the total price. It is not a legal requirement when taking out a car loan, but is almost always required by the lender.

**Interest rate**: An interest rate is a basic rate charged to the borrower for the money loaned. The interest rate is normally expressed as a percentage for a one-year period and known as the annual percentage rate (APR).

**Terms and conditions**: All of the other items that comprise a car loan, including the term of the loan, typically stated in terms months or years; insurance and registration requirements; loan repayment and resale terms; maintenance requirements; conditions regarding theft or collisions; and conditions of loan default and repossession.

### What does the mortgage calculator do?

The car loan calculator helps estimate the monthly payment due for the duration of the repayment period of the loan.

### What is the equation to calculate a car loan?

The information you need is the amount of the loan, the interest rate per month and the total number of months that you will make a payment.

Monthly payment = r + r / ( (1+r) ^ n -1) x Present Value

Where:

r = rate per month

n = number of months