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I just took a car loan. The amount financed is $12,865.57, the APR is 3.06%, and the length is 48 months.

The finance company charges $285.47 monthly. I would like to know how they calculated such monthly payment?

Brythan
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Jose Romero
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1 Answers1

5

I would like to know how they calculated such monthly payment

The formula is:
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Your values would come out to be:

r = (1+3.06/(100*365))^31-1=0.002602 (converting your annual percentage to a monthly rate equivalent of daily compounded interest)
PV = 12865.57
n = 48

Inserting your values into the formula:

P = [r*(PV)]/[1-(1+r)^(-n)]
P = [0.002602*(12865.57)]/[1-(1.002602)^(-48)]
P = 285.47

Nosrac
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