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AutoLoanWise

Methodology

We believe a finance tool should be transparent. Here is exactly how every AutoLoanWise calculator works, what we assume, and where the limits are.

How monthly payments are calculated

We use the standard fixed-rate amortization formula: payment = P × i ÷ (1 − (1 + i)−n), where P is the amount financed, i is the monthly interest rate (APR ÷ 12), and n is the number of monthly payments. When the APR is 0%, the payment is simply P ÷ n. All results are rounded to the nearest cent.

How the amount financed is determined

For purchase calculators, the financed amount is the vehicle price plus estimated sales tax and fees, minus your down payment, trade-in equity (trade-in value less any balance owed on it), and rebates. Sales tax is applied to the price after subtracting trade-in value, which is the common rule in most US states — your state may differ.

How refinance savings are estimated

We build a new amortization schedule for the loan you're considering and compare it to the cost remaining on your current loan. Monthly savings is the difference in payment. Lifetime savings is the remaining cost of your current loan minus the new loan's total cost, including refinance fees and any prepayment penalty. The break-even point is the upfront cost divided by the monthly savings.

How payoff timelines are calculated

We amortize your loan month by month. Each month, interest accrues on the outstanding balance and the rest of your payment reduces principal. We compute a baseline schedule and an accelerated schedule (with your extra payments) and report the difference in months and total interest.

How extra and biweekly payments are applied

Extra monthly amounts and one-time lump sums are applied entirely to principal in the month they're made. Biweekly payments are modeled as one additional monthly payment per year (your monthly payment ÷ 12 added each month), which closely approximates a true 26-payment-per-year schedule.

Specialty calculators

Affordability. We invert the standard payment formula to find the largest loan that fits your monthly budget, then back out the maximum vehicle price as (max loan + down payment + trade equity − fees) ÷ (1 + sales tax). Sales tax is applied to the vehicle price (not the price net of trade-in) for simplicity; if your state taxes the price net of trade-in, you can typically afford a slightly larger vehicle than we show.

Lease buyout. Total cash cost = residual value + purchase-option fee + sales tax on that total. If you finance, the loan amount equals the cash cost minus your down payment and amortizes normally. Most US states tax the full buyout price; a few credit prior lease-payment tax — verify your state's rule.

EV / Tesla. The federal Clean Vehicle Credit is modeled as a cap-cost reduction — equivalent to an extra down payment applied to what you finance. Sales tax is calculated on the full vehicle price, matching how the point-of-sale credit generally works. Eligibility, half-credits, MSRP caps, and income limits are not modeled — verify on the IRS Clean Vehicle Credit page.

Commercial truck (balloon). When a balloon B is owed at month n, the payment formula becomes (P − B × (1 + i)−n) × i ÷ (1 − (1 + i)−n). The schedule amortizes month by month and the final balance equals the balloon. With B = 0 the result is identical to the standard amortizing payment.

Lease vs Buy. Compared over the same period: lease total = drive-off + (monthly × period) + disposition fee; buy net cost = (down + monthly × period) − (estimated value at end − loan balance after the period). Taxes and fees are omitted for parity; enter quoted lease and buy figures.

APR vs interest rate. When the interest calculator is given an upfront-fees value, we solve for the effective APR by bisection: the rate r such that net amount received (loan − fees) equals the present value of the scheduled payments. With no fees, APR equals the nominal rate.

Assumptions and limitations

  • We assume simple-interest loans with fixed rates and equal monthly payments.
  • We don't model precomputed-interest loans, variable rates, or lender-specific fee structures (the truck calculator does support balloon payments).
  • Tax rules, registration costs, and fees vary by state and lender; enter values for your situation.
  • Results are estimates for education and planning, not quotes, approvals, or financial advice.

Calculations run entirely in your browser. Nothing you enter is transmitted to a server or stored.