1. What is the Payment Per 1000 Calculation?

The Payment Per 1000 calculation helps determine the monthly payment amount for every $1000 borrowed on a car loan, accounting for extra payments. This standardized measure allows for easy comparison of loan terms and interest rates.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( r \) — Monthly interest rate (decimal)
• \( n \) — Loan term in months
• \( Extra \) — Additional monthly payment amount

Explanation: The formula calculates the fixed monthly payment required to pay off a $1000 loan over the specified term, then subtracts any extra payment amount.

3. Importance of Loan Payment Calculation

Details: Understanding payment per $1000 helps borrowers compare loan offers, budget effectively, and see the impact of extra payments on their loan term.

4. Using the Calculator

Tips: Enter the monthly interest rate as a decimal (e.g., 0.005 for 0.5%), loan term in months, and any additional monthly payment. All values must be valid (rate > 0, term ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate (APR) by 12 (for months) and by 100 (to convert to decimal). Example: 6% APR = 0.06/12 = 0.005 monthly.

Q2: How much do extra payments save?
A: Extra payments reduce total interest paid and can shorten the loan term significantly, especially when made early in the loan period.

Q3: What's a typical payment per $1000?
A: For a 5-year (60-month) loan at 4% APR, payment per $1000 is about $18.42. Rates vary with terms and credit scores.

Q4: Should I prioritize extra payments or higher down payment?
A: Depends on loan terms - extra payments help more with long-term loans, while larger down payments reduce initial principal.

Q5: How does loan term affect payment amount?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.