# how is auto loan apr calculated How Do They Calculate Your Car Loan APR The annual percentage rate calculated on your car loan is found by taking therate per period multiplied by the number of payments you will make in a given year. Annual percentage rate is one way to determine the actual expense of financing in a given year, but it is not always the most accurate.

• ### How is Apr calculated for loans?

• APR = ( (Interest + Fees / Loan amount) / Number of days in loan term)) x 365 x 100 For example, Frances borrows \$2,000 at a 5% interest rate for two years. The closing administrative cost for the loan is \$200.

• ### Is it better to get a car loan in terms of Apr?

• It is often best to get both into terms of APR, which will be the lower quote of the two. Car loans and CDs are not the only types of loans and investments that use a compounding interest formula to determine the total amount you will spend in financing. The most challenging example often comes with credit card debt.

• ### How do I calculate my car loan interest rate?

• Now divide this number by your loan amount. Divide this number by the number of days in your loan term and multiply the result by 365 to find your annual rate. Finally, multiply by 100 to get the annual rate as a percentage. Example of a Calculation Let’s say you’re paying \$20,000 for the car and you’re putting down \$2,000.

• ### What is the APR on a \$5000 car loan?

• You have a \$5,000 car loan with an interest rate of 2% per month over a 48 month period. APR = 12 months (.02 per month) = 2.4% APR APY = ( 1 + .02 per month ) multiplied by 12 months -1 = 2.68% APY