Car Finance Calculator: How To Calculate My Car Loan?

August 8, 2022

A car finance calculator can help you calculate the total repayments for your car loan. If you are in the market for buying another car chances are that you don’t have the full amount of capital to buy it outright.

The best option would be is to get a loan which lessens the burden of the cost so you can buy the car you want without any hassles. Buying a car is always considered a necessity for our daily routine to get from A to B. However, buying a car is a commitment, you need to be on top of your finances and take care of the car loan repayments.

Do you really know the exact costs other than the price tag that the car dealer offers? Do you include all fees and take into account the added cost with interest rates?

In this article, we will explain how to calculate your car loan and how the interest rates affect your total repayments. What a car loan does if it is suited to you, and what are the lending criteria or eligibility conditions for you to take a loan.

What is a car finance calculator?

A car finance calculator is a simple tool that performs vehicle financing calculations. It provides you with the term repayments for your loan as well as the total cost of your periodic payments and gives you information about the different interest rates, term lengths and more.

With the Mad Man Motors car finance calculator, you can see how much interest you’ll be paying with the loan and what the total repayment will be.

As a disclaimer, our car finance calculator is only an estimation tool. Your interest rates and repayments will be based depending upon your credit profile and the offer.

car finance calculator example

How to calculate your car loan interest manually?

To calculate the annual interest on any loan, divide the annual interest rate by the number of repayments. Multiply that figure by the amount of borrowed principal.

Here is how you can calculate:

1. Divide your interest rate by the number of yearly repayments. If your repayments are weekly divide the interest rate by 52 weeks. If your repayments are once a month, divide the interest rate by twelve.

2. Multiply the result by your car loan balance. When you pay back your first repayment, the total balance is equal to your total principal.

An example, you got a personal car loan of $10,000, at an interest rate of 10%. You choose to make repayments once a month, this is how your interest formula for the initial repayment can be:

( 10% ÷ 12 months ) X $10,000 = $83

When you make regular payments against your loan, the amount of interest you pay monthly will change depending on your updated loan balance. To work out your new balance, subtract the interest to date from the repayment amount, then subtract the result from the principle.

For example, if your monthly repayment is $200, the new balance for your second repayment would be:

$10,000 ($200 – $83) = $9,883

Then, to calculate the next month’s interest value, you’d use the following formula:

( 10% ÷ 12 months ) X $9,883 = $82.35

The interest on the second repayment is lower since it takes into account the deductions from the initial repayment. As your loan balance gradually is reduced from month to month, the amount for interest is also reduced.

So, by making larger monthly repayments on your car loan, you can reduce the total cost of the interest you pay over time even though there’s no change to the annual interest rate.

Use Mad Man car finance calculator

If you are struggling to calculate with the above formula don’t worry we have a solution for you. You can check the Mad Man Motors Car Loan Calculator, just type in the figures and it will calculate your exact monthly repayments, all done automatically and in less than a second.

Car Loan Application Approved

What are the different types of car loans?

Taking out a car loan is a personal form of financing that is applied when buying either new or used cars. The cost of the loan includes the cost of the principal, but also any interest accrued over the life span of your repayment period.

Here are the most common types of car loans available:

Unsecured loans

With an unsecured loan, there is no collateral involved so if you default on payments, the lender has no way of getting their money back from you or taking any other form of legal action.

Secured loans

With this type of loan, (Usually, it’s provided by financial institutions that provide financial services) you have to put up collateral for the loan. The lender will take control of this collateral in case you can’t pay back your debt. This means that if you default on a secured loan, the lender will sell off your collateral to cover the loss on their end.

Fixed interest rates loans

Fixed interest rate loans are loans with the same interest rate throughout the end of the loan. This type of loan is best if you know how long you will need to borrow money or if you are happy with a fixed interest rate and don’t want to risk your credit score by taking out an unsecured loan.

Variable-rate loans

A variable-rate loan is a type of loan that has a floating interest rate. The rate is calculated with the index, which is usually the prime rate. This means that when the prime rate goes up, so does your interest rate on your variable-rate loan. Variable-rate loans are also known as adjustable-rate mortgages and home equity lines of credit (HELOCs).

Tips for choosing a car loan

  1. The first step is to determine the information about the type of loan you want to take out. You should select either a secured or an unsecured car loan.
  2. Next, is to calculate your down payment amount, which is how much money you are going to put as a deposit on the vehicle to get a lower interest rate.
  3. Before contacting any car dealer you should also review your current credit score. Figure out your credit score if it’s over 700, it’s ideal to choose an unsecured loan or if it’s below 700 for a secured car loan.
Car Loan Eligibility

Car loan eligibility in Australia

Car loan eligibility criteria are what borrowers must meet in order to get approved for financing. While eligibility requirements may vary with the lender, loan type, and rate of interest, a general requirement for an Australian car loan is to provide:

  • Identification as in Proof of Age & Address = Car loans in Australia are only provided to Australian citizens who are 18 years or over.
  • Proof of stable income = The applicant needs to provide a bank statement or payslip that proves they can afford to repay the loan on top of monthly expenses.
  • Documentation on assets and liabilities = Borrowers should add to their application a list of what exactly they owe such as property mortgage, existing loans, credit card debt, etc.

Most car finance companies will allow you to obtain a car loan with good or excellent credit scores. Credit score requirements vary depending on the type, but low credit scores are always a negative factor.

So it all depends on your desired type of loan with some of your specific needs for it (home loan, loan product, or personal loan).

Fix Your Credit Score

Tips for a higher eligibility car loan

When it comes to getting a loan, you must always consider seeking to be eligible for your lender. To make that happen, you need to focus on some requirements that can make you more qualified for getting that desired loan that you wished for. You can choose the options below:

Short-term loans

if you want a shorter repayment period with higher monthly repayments, then your interest rates will be lower. A short-term loan will always give you the advantage of getting the desired loan due to its short payment method which is a lower risk for lenders.

Larger down payment

Down payment is a percentage of the car’s purchase price that buyers pay upfront as a deposit. A larger down payment is a way to lower the risk of borrowing. This will result in lower interest rates and better loan terms.

Always remember that the less your down payment, the higher your interest rates will be.

Purchasing a reliable vehicle

When choosing the type of loan you want, the vehicle choice will always come to mind as the first thing you need to consider. The vehicle purchase will serve as the collateral, so the condition is dependent on the resale value if the debt goes bad.

Good credit score

When applying for a loan, the lender will look at your credit history and credit score. A good credit score, along with a history of responsible lending behaviour will make you more likely to be granted approval for car financing.

Your credit score can be influenced by many factors, for instance:

  • The type of your loan and its credit history (length of the full credit history)
  • Financial behaviour ( they can check whether you have good behaviour and responsibility towards your payments to the previous lenders)
  • Check with your existing and current loans and see if you can adjust them or if you’re willing to pay them at the right time.
  • Check how many times you have applied for loans, how many times you got accepted for a loan, and how many times your application was rejected.
Find Out Your Credit Score

Benefits of car finance through a car dealer

When you compare car loans, you’ll consider applying for car loan finance at your local bank or through a loan broker. However, if you are in a hurry, obtaining a loan directly through a car dealer could be a convenient choice that provides better car finance rates.

Here are some of the perks of utilizing a car dealer for car loan financing:


Car dealerships typically have established relationships with a panel of trusted lenders. The dealership can assist you with arranging the loan, which means less work for you.

Quick Approval

If you arrange car financing through a dealership, you will be able to choose the perfect car, combine it with the best financing deal and drive off in your new vehicle, all in one day.

Flexible Terms

Many potential car buyers who have low credit scores may struggle to qualify for financing through a bank. Luckily, a trusted dealership might be able to find an option that works even with lower credit scores.

Car Deals

For example, car dealers like Mad Man Motors have a car of the week promo which gives away a free full tank of petrol, a $500 visa card, and an inclusive 3-year warranty. Whereas a bank loan does not even offer this kind of incentive.

How car finance works with Mad Man Motors

At Mad Man Motors, we are committed to providing the best possible car finance rates. Even if you have experienced bad credit, defaults or bankruptcy, the MadMan finance team can help you get your dream car and back on the road again.

Here is what the Mad Man finance team can offer:

  • Customized finance packages – We provide competitive comparison rates on tailored car finance programs to fit your wants and budget.
  • Friendly Service – Our finance managers are here to speak concerning your finance selections and provide quick, obligation-free pre-approvals.
  • All credit scores considered – We can work with people who have different levels of credit scores.
  • Fast approvals – Approved customers can enjoy many benefits, one of which is getting immediate car finance. Schedule a visit at Mad Man Motors today and experience our quick and easy car buying process.

At Mad Man Motors, we believe in making car financing hassle-free. We can help you buy a car with ease and security through our no hassle, no pressure finance process.

Mad Man Motors Car Finance for Perth

Buying a new car can be an expensive and complicated process. But with Mad Man Motors Car Finance, you have the opportunity to buy your next vehicle with ease, in hours. Dealerships are on the outside, simplicity’s on the inside.

We know you’re tired of spending your time driving round after round in search of that perfect vehicle that suits you and your budget. Use our car finance calculator to find out how much you can afford with ease! Your search is over. Give us a call today to get started on financing your next car.