Metro Honda

key on calculator

How To Calculate Interest Rate on a Car Loan

If you live near Hoboken and looking for a car loan, you should know your interest rate. There is nothing worse than making plans for an auto loan and getting hit with interest. At Metro Honda, we believe you deserve to feel confident. You can turn to us when you need to know more about car financing; we are here to help.

What Is an Interest Rate?

To understand a car loan, you need to know that there is an interest rate. Your interest rate will differ from your Newark neighbor. Thus, understanding your interest rate is essential. An interest rate is a fee you pay the lender for borrowing their money. After all, a car loan is borrowing money from a lender. They own the car until payment is complete. To calculate the interest rate will depend on these factors:

  • Principal Amount: The total amount you wish to borrow with your auto loan.
  • Loan Term: The set amount of time to repay your short-loan. For example, short-term loans have higher monthly payments with less interest to pay at the end. Long-Term loans have lower monthly payments with higher interest to pay at the end.
  • Repayment Schedule: Most auto loan payments are made monthly. You can save money in the long-run if you can make frequent payments. You pay less interest when you make more payments.
  • Repayment Amount: A part of every payment you make goes to your interest and the other to repaying your principal amount.


How to Figure Interest on a Car Loan for First Payment

There is a calculation to figure an interest rate. Here is the calculation:

  • Divide your interest rate by the number of monthly payments per year.
  • Multiply the monthly payment by the balance of your loan. However, for the first payment, this will be your total principal amount.
  • The amount you calculate is the interest rate you will pay for your first month’s payment.

How to Calculate Auto Loan Interest for the Coming Months

To calculate future auto loan interest payments, you will need a different calculation:

  • Subtract the interest from your current debt. The amount left is what you owe towards your loan principal.
  • Deduct the above amount from your original principal to get your new loan balance.

The calculation is an estimate of what you will pay towards an auto loan. Use the amount as a reference or guideline; it may not be the same amount you receive.

Need Help with Your Car Loan? Consult with Metro Honda

Whether you live in or near the Bayonne area, Metro Honda can assist you with your car loan. If you have any questions on trading-in a financed car, contact our Finance Department. Feel free to use our online car payment calculator! If you are looking to upgrade your Honda, we have new Honda vehicles for you to find your best match!

More From Metro Honda

  • 2021 Honda Civic Colors

    The new Honda Civic is available in a wide variety of colors, from subtle tones to vibrant hues that are sure to turn heads on Bayonne streets. The Metro Honda team is certain that you’ll find a Civic color that will be the perfect match with your personal style, What are the Honda Civic color options?…

  • What are the 2021 Honda CR-V Dimensions?

    The compact Honda CR-V dimensions make it an ideal choice for navigating busy Bayonne streets. But don’t let the smaller size of this crossover SUV fool you! The interior is surprisingly spacious, with comfortable seating for up to five and plenty of cargo space. Learn more about how the CR-V interior and exterior dimensions will…

  • 2021 Honda Accord Trim Levels

    The Honda Accord has received praise from Car and Driver for being a “practical and fun-to-drive car,” and the team at Metro Honda believes you’ll find this stylish midsize sedan to be a perfect choice to upgrade your Newark driving experience. There are nine Honda Accord trim levels available, each loaded with features that will add…

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

(201) 451-7111

Call Now

540 Route 440 North • Jersey City, NJ 07305

Get Directions

Today's Hours:

Open Today! Sales: 9am-9pm

Open Today! Service: 7:30am-7pm

Open Today! Parts: 7:30am-7pm

Metro Honda 40.7149441, -74.0954756.