I’m trying to budget to buy a new car. I want to move things around, so I want to figure out how much interest I’d be paying on my car loan. There are many calculators available, but I prefer to do it by hand. I trust myself more than logging numbers into something online.

**You can calculate your interest costs using the formula I = P x R x T, where:**

- “I” is the interest cost.
- “P” is principal, or the original amount borrowed.
- “R” is the rate of interest, expressed as a decimal.
- “T” is term, or length of the loan.

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## FAQ

**How is interest calculated on a car loan by hand?**

**How to Figure Interest on a Car Loan for First Payment**

- Subtract your interest rate from the annualized number of monthly payments.
- Multiply the monthly payment by the balance of your loan.
- You will pay the calculated amount as interest on your first month’s payment.

**How do you calculate interest on a car loan?**

Subtract the number of payments you’ll be making that year from the interest rate. If you make monthly payments and your interest rate is 6%, you would divide 0 by 6. 06 by 12 to get 0. 005. To determine how much interest you’ll be paying that month, multiply that amount by the amount of the loan still outstanding.

**How do you calculate interest on a loan manually?**

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**How does Car Loan EMI Calculators work?**

- ‘P’ stands for the Principal Amount. …
- “R” stands for the bank’s set interest rate.