If you are planning to buy a car, it is also important to learn the amount you need to down payment and also the interest you have to pay on monthly basis. Having practical regarding how much you are spending in altogether will help you to decide this future investment. Calculating auto loan is important because sometimes dealers offer a very attractive deal on auto which seems like you are paying nothing upfront, but actually you are paying almost 50 % interest on monthly basis, if you count them correctly. To save yourself from such trap try to count your exact interest rate for the car that you are buying. It is actually not at all difficult to calculate the rate of interest you have to pay for particular purchase. First you need to learn the different form of loan. One is simple loan where you loan out an amount like 5000$ and return just 5500$ at the end of certain period, this usually occur between individual and the car dealer. While in case of bank loan it is complex and accrue different rate of interest. To know the exact interest of the loan you just have to do few addition, subtraction and division using calculator. These are the few tips to calculate the exact auto loan-

Knowing the formula

- First calculate the loan rate by simple formula.
- Take a plain paper; write down the principal amount you borrowed and the total interest you are paying. The formula of the interest rate will be total interest divided by principal money.
- Suppose you borrowed $ X and giving the total interest about $Y then your interest will be X/Y.
- As this will be in decimal just multiply this with 100 will give you the percentage of interest you are paying on particular principal.
- Suppose by the formula X/Y = Z, then percentage will be Z * 100.

This is the simple way to count the interest of your car you are paying or going to pay for any particular purchase, It is extremely important because that will give you the exact idea how to spend your money in most efficient way.