How to Calculate APR on Car Loan

Car Research Burlington NJ
Car Research Burlington NJ


Are you ready to finance your next car? Figuring out what you can afford is important, as is knowing the cost of your auto loan. One of the factors that goes into your loan terms is APR, or annual percentage rate.

Do you want to know how to calculate APR on a car loan so you’ll know exactly how much it will cost per year for your auto loan? The team at Burlington Volkswagen is here to show drivers in Burlington, Burlington Township, and Willingboro, NJ, how to do it!

Car Research Burlington NJ

What Is APR?


Buying a car involves a lot of different numbers, one of which is the annual percentage rate. This is the cost per year to borrow money for an auto loan balance plus other fees. For example, if the interest rate on your ride is six percent, your APR may be a few decimal points higher, say 6.2 percent, because of fees that aren’t included in the interest rate.

Lenders will determine APRs similarly to how they determine interest rates, including but not limited to:

  • Credit score
  • Whether the vehicle is new or used
  • Down payment
  • Length of the loan
  • Money borrowed

There are two different types of APRs: fixed and variable. Like an interest rate, a fixed APR will stay the same throughout the life of your auto loan. Variable rates will fluctuate.

How Can I Calculate APR on My Car Loan?

Calculating the APR on your car loan is easy! 

We have a Payment Calculator on our website that will help you determine the interest rate and APR. You’ll want to know your monthly payment amount and other fees ahead of time. Alternatively, you can ask the lender how much the loan APR is and for an itemized breakdown of how they’ve determined that number. 

If you want to calculate the APR yourself, take 12 months and multiply it by your interest rate. That will determine your APR, and you’ll have a clear view of your monthly payment. 

Like shopping for a car, you’ll want to shop around for different APRs. You can visit our dealership and talk with a member of our finance team about our flexible rates, as we work with a variety of lenders. There are other institutions, such as banks and credit unions, that can also assist with auto loans. 

What Impacts APR on Car Loans?

The biggest impact on the APR for your loan is your credit score. Basically, the better your credit score, the lower your APR should be. 

Before purchasing a car, check your credit score for errors and dispute them if you can. If there are any debts you can pay off before purchasing a car, it would be a good idea to do so, as that can increase your score.

Additionally, check for hard inquiries. When you apply for an auto loan, a new hard inquiry will generate. It’s important to keep these to a minimum, as too many hard inquiries in a short period of time might discourage lenders from giving you a favorable APR and interest rate. 

Visit Burlington Volkswagen to Find Your Next Car


Now that you know about APRs and how to calculate APR on a car loan, are you ready to find a stylish set of wheels that fits your budget? The Burlington Volkswagen team can’t wait to work with you, so contact us today and test drive your favorite vehicles on the Burlington, Burlington Township, or Willingboro, NJ, streets.


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