Car Loan Payment Calculator

Taking a car loan means you borrow a certain amount of money (the principal), which you will pay back over a certain number of months. Your monthly payment is the sum of the principal and interest (the cost of borrowing money).

How to calculate your car loan payments:

The three main components of your monthly payments are:

• Principal (P): The total amount you are borrowing, which is the price of the car minus any down payments or trade-ins
• Interest Rate (r): The annual percentage rate (APR) charged by the lender
• Loan Term (n): The length of time you that have to pay it back (specified in months)

Use RBC’s Car Loan Payment Calculator for fast estimates, and confirm all results with an RBC advisor.

To calculate interest on a car loan, first use the standard formula above to determine your monthly payment amount, which factors in the principal amount, interest rate, and loan term. Here’s a step-by-step example:

Consider a scenario where you borrow $30,000 at a 5% annual interest rate over 60 months (5 years) with monthly payment frequency.

You will have:

• Your fixed-rate monthy payment: $566.14
• Total payments over 5 years: $566.14 x 60 = 33,968.4

Next, to calculate the total interest paid, the formula is:

Total interest = (Total payments) - (Principal)

In this case, the total interest costs are $33,968.40 - $30,000 = $3,968.22

Note that this calculation assumes your loan has fixed interest rate (no changes during the loan term), no prepayment, fees, or missed payments. For quick calculations, use RBC’s Car Loan Payment Calculator.

There are several important factors that can impact your car loan interest rate:

1) Credit score

• This is the most important factor as your credit history is how lenders will be able to assess your likelihood of repaying the loan.
• The higher your credit score, the lower the risk in terms of you repaying the loan.

2) Loan term

• A shorter loan term will often have lower interest rates – 36 to 48 months (3 to 4 years).
• A longer loan term may offer lower monthly payments, but usually come with higher rates overall – 72 to 84 months (6 to 7 years).

3) Vehicle type and age

• Newer cars usually come with better rates because the vehicle’s value holds better, and it can serve as collateral.
• Older/used cars often have higher rates when compared to new cars (along with stricter terms).

4) Down payment size

• A larger down payment reduces how much you’ll need to borrow and lowers the lender’s risk
• A smaller down payment (or none) may lead to higher rates

5) Broader economic conditions

• There is a “benchmark rate” that is set by the central bank that determines auto loan rates across the board.
• When the benchmark rate goes up, lenders also raise their car loan rates.

Most car loans have fixed rates, meaning the monthly payment remains the same for the entire term. It all comes down to the type of loan you have. However, having a variable-rate loan means your payment may fluctuate based on market interest rate changes.

Fixed-rate car loan

The lender calculates your monthly payment when you take out a loan (calculated using principal, interest rate and term)

• The monthly payment remains the same every month until the loan is paid off.
• The only thing that changes over time is the portion of your payment going towards the interest. In the early months, most of the payment goes to the interest, and later, more goes to paying down the principal.

Variable-rate car loan

• While less common for car loans, in a variable-rate loan, your interest rate can go up or down if market rates change.
• Your monthly payment could change over time as rates change.

Yes. RBC provides flexible payment options. Pay monthly, semi-monthly, bi-weekly or weekly. There’s no penalty to pay off your loan early.

Visit a participating dealership and ask for an auto loan with RBC for a car, electric vehicle (EV), RV, or marine vehicle. Find an RBC partner dealership near you.

Choose a term from 1 to 8 years with financing available for units up to 10 years old. Visit one of our partner dealerships to learn more.

Payments are set up at the time you acquire your loan. You would have signed up for Pre-Authorized Debits (PAD) from your Financial Institution and provided a void cheque to confirm account details.

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