How to Calculate Interest Rate On a Car Loan

Woman Using Calculator

You’ve just picked out the perfect car and signed on that dotted line, but what happens next? When you start paying back your car loan, you’ll notice that you’re charged interest every month. If you’re not quite sure how to calculate interest rate on a car loan, there’s no need to worry! Read on to learn the basics of interest rates with Sames Bastrop CDJR near Giddings and get a head start on the financing process from home!

What is Interest?

Before we get into the nitty-gritty of how to calculate interest rate on a car, let’s start out with the fundamentals. When you sign up for a car loan, you pay a monthly fee to slowly pay off the loan and gain equity. But initially, it’s your lender that officially owns the vehicle. Your interest is the fee you pay to the lender for this exchange over time. However, many factors go into the calculation of your personal interest rate:

  • Principal Amount: This is the total amount that you wish to borrow from the lender.
  • Loan Terms: This is the duration of the car loan. Shorter terms usually have lower interest rates with higher monthly fees, while longer terms have higher interest rates and lower monthly fees.
  • Repayment Schedule: While most people pay off car loans in monthly installments, others prefer to pay more frequently to shorten the duration of the loan and save money.
  • Repayment Amount: The money you pay off on your loan goes toward both the principal amount and the interest, so the more you pay, the closer you are toward ownership.

Step 1: How to Calculate Auto Loan Interest Initially

Your first loan payment will involve a slightly different calculation than your ongoing payments.

  • Divide your interest rate by the number of annual monthly payments.
  • Multiply this figure by the whole principal amount.
  • This number will be your amount of interest for the first month.

Step 2: How to Figure Interest on a Car Loan for the Future

After you’ve paid your very first bill, you’ll need to adjust your calculations slightly. While this won’t be a precise figure, it’ll give you a good estimate to keep your finances in check!

  • Find out how much you’ve paid off the loan principal. Subtract your calculated interest from the payment you just made.
  • Subtract this figure from your original principal.
  • This number will be your new loan balance.

Trust Sames Bastrop CDJR for your Auto Financing Needs

Whether you’re stopping by from Del Valle or Giddings, the staff at Sames Bastrop Chrysler Dodge Jeep Ram would be happy to help you with your next car purchase! We offer online resources like our Payment Calculator and Value Your Trade tool for free to help you budget like a pro. Need more assistance? Contact us or swing by Cedar Creek for custom advice!

Explore Our Models

  • 2020 Jeep Wrangler Interior

    The 2020 Jeep Wrangler remains the rugged classic that can climb hills and kick up the dust off-road, but it’s no longer the uncomfortable bare-bones vehicle of the past. With comfort features, the latest in driver technology, and loads of interior cargo space, the new Wrangler can get you comfortably off-road from Bastrop or make…

  • 2019 Ram 3500 Towing Capacity

    What is the RAM 3500 towing capacity? The 2019 RAM 3500 is arguably the most powerful pickup truck you can get. It handles the heaviest equipment and the toughest, most critical jobs in the Bastrop area with your choice of two available engine options, and strength to handle tens of thousands of pounds. Need RAM…

  • 2020 Jeep Gladiator Engine Specs

    It didn’t take long for the 2020 Jeep Gladiator to make waves across Bastrop and Giddings, and drivers all over are looking for specs and pricing info. Are you looking to learn more about the available Jeep Gladiator engines? Sames Bastrop Chrysler Dodge Jeep Ram is here to help! Learn all about 2020 Jeep Gladiator horsepower, towing capacity, mpg, and…

Saved Vehicles ×


You don't have any saved vehicles!

Look for this link on your favorites:


Once you've saved some vehicles, you can view them here at any time.

Contact Us ×

​(512) 772-4866

Call Now

1586 TX-71 • Cedar Creek, TX 78612

Get Directions

Today's Hours:

Open Today! Sales: 9am-8pm

Open Today! Service: 7am-6pm

Open Today! Parts: 7am-6pm

Sames Bastrop Chrysler Dodge Jeep Ram

1586 TX-71 Cedar Creek, TX

Phone: ​(512) 772-4866


Phone: ​(512) 772-2744

1586 TX-71 Cedar Creek, TX

Mobile Parts

Phone: (512) 772-4793

1586 TX-71 Cedar Creek, TX


Phone: ​(512) 772-4866

1586 TX-71 Cedar Creek, TX

Mobile Sales

Phone: ​(512) 772-2299

1586 TX-71 Cedar Creek, TX


Phone: ​(512) 772-3481

1586 TX-71 Cedar Creek, TX

Mobile Service

Phone: ​(512) 772-4862

1586 TX-71 Cedar Creek, TX
30.1259126 -97.4388706
[schema type="organization" orgtype="LocalBusiness" url="" name="Sames Bastrop Chrysler Dodge Jeep Ram" description="" street="1586 TX-71" city="Cedar Creek" state="TX" postalcode="78612" country="US" email="MWASEM@SAMES.NET" phone="​(512) 772-4866" logo=""]
Sames Bastrop Chrysler Dodge Jeep Ram
Sames Bastrop Chrysler Dodge Jeep Ram
1586 TX-71
Cedar Creek, TX, 78612 US
​(512) 772-4866
Sames Bastrop Chrysler Dodge Jeep Ram 30.1259126, -97.4388706.