The formula to calculate the Monthly Payment is:
\[ \text{Monthly Payment} = \frac{\text{Loan Amount} \times \left(\frac{\text{Interest Rate}}{12}\right)}{1 - \left(1 + \frac{\text{Interest Rate}}{12}\right)^{-\text{Loan Term}}} \]
This calculator helps you determine the monthly payment for a car loan based on the price of the car, the money you have, the trade-in value of your current car, the sales tax rate, the interest rate, and the loan term.
Let's assume you want to buy a five-year-old Jeep Wrangler worth $20,000. You also have a car – an old Chevrolet Silverado worth about $7,000, and $1,500 in your savings account. The sales tax in your state is 10%, and the interest rate on the car loan is 4%. You want to take a three-year loan. To calculate the monthly payments, follow these steps:
\[ \text{Monthly Payment} = \frac{12,200 \times \left(\frac{4\%}{12}\right)}{1 - \left(1 + \frac{4\%}{12}\right)^{-36}} = $360.19 \]
Therefore, the monthly payment is approximately $360.19.
