1. What is Total Cost of Loan?

The Total Cost of a car loan represents the complete amount you'll pay over the life of the loan, including both principal and interest. It helps borrowers understand the true cost of financing a vehicle.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( PMT \) — Monthly payment amount (USD)
• \( n \) — Loan term in months

Explanation: This calculation multiplies your fixed monthly payment by the total number of payments to determine the full repayment amount.

3. Importance of Total Cost Calculation

Details: Understanding the total cost helps compare different loan offers, assess affordability, and make informed financial decisions when purchasing a vehicle.

4. Using the Calculator

Tips: Enter your monthly payment amount in USD and the loan term in months (typically 24-72 months for car loans). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include the down payment?
A: No, this calculates only the financed amount. The total cost to purchase would include your down payment plus this calculated amount.

Q2: How can I reduce my total loan cost?
A: You can reduce total cost by making a larger down payment, choosing a shorter loan term, or negotiating a lower interest rate.

Q3: Why is my total cost higher than the car price?
A: The difference represents the interest charges over the life of the loan.

Q4: Should I focus on monthly payment or total cost?
A: While monthly payment affects your budget, total cost shows the true price of financing. Always consider both.

Q5: Does this account for early repayment?
A: No, this assumes you'll make all scheduled payments. Early repayment would reduce total interest paid.