How a monthly car payment is calculated
The vehicle price is reduced by the deposit and increased by any initiation fee that will be financed. The annual interest rate is converted into a monthly rate, and the instalment is calculated so that the remaining balance at the end matches the selected balloon amount.
Instalment = [r × (P − B ÷ (1 + r)^n)] ÷ [1 − (1 + r)^−n]
In the formula, P is the amount financed, B is the final balloon, r is the monthly interest rate and n is the number of months. Read the full calculator methodology for assumptions and limitations.
A lower monthly instalment is not automatically a cheaper agreement.
A longer term or balloon can reduce the monthly debit order while increasing total interest or leaving a large final payment. Compare the total repayment and final liability as well as the monthly number.
Car instalment calculator: what changes the repayment?
- Vehicle price: a higher purchase price normally increases the amount financed.
- Deposit: a larger deposit reduces principal and usually reduces interest.
- Interest rate: a higher annual rate increases the interest charged each month.
- Term: more months can reduce the instalment but commonly increase total interest.
- Balloon: a larger final balance lowers the regular instalment but remains payable later.
- Fees: financed and monthly fees increase the total cash paid.
- Extra payments: where a provider applies them to principal, they may reduce interest and the final balance.
Vehicle repayment calculator assumptions
- Interest is estimated monthly from the annual rate entered.
- The repayment is treated as fixed before optional extra payments.
- The balloon is calculated as a percentage of the vehicle price.
- The initiation fee is financed only when entered.
- The service fee is charged for each month in the simulated schedule.
- Extra payments are assumed to reduce principal after the scheduled instalment.
- If extra payments do not settle the agreement early, the remaining balance is shown as the final payment.
- Figures are rounded for display, so a provider quote may differ slightly.
What is excluded?
Insurance, tracking products, warranties, dealer charges, licensing, registration, fuel and other ownership costs are not included automatically. Use the Total Cost of Ownership Calculator for a broader estimate.
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Frequently asked questions
How accurate is the monthly car payment estimate?
It is a planning estimate. A real provider may use different rate conventions, fee treatment, payment dates, insurance products or rounding. Compare the result with a written quotation.
Does the calculator include a balloon payment?
Yes. Enter the balloon as a percentage of the vehicle price. The tool shows the original final liability and compares the structure with no balloon.
Can extra payments settle the finance early?
They can in this model because each extra amount is applied to principal. A provider may instead reduce the final balance, recalculate the agreement or apply different rules. Confirm the allocation and any early-settlement process before paying extra.
Why can the amortisation schedule differ from a bank statement?
Actual statements can reflect payment dates, daily interest, provider-specific rounding, fees, skipped or late payments, insurance and other contractual items that this planning model does not reproduce.
Last reviewed: 21 July 2026. This calculator is for general information only. It is not financial advice, a credit assessment, a quotation or a settlement statement. Confirm all figures and additional-payment rules with a registered credit provider before acting.