How to Calculate Total Interest Paid on a Car Loan. To find out how much your car is really costing you, you need to calculate the total interest paid on your car loan. You may have purchased your car for a steal, but if you're paying a fortune in interest, your steal is not so much of a bargain.
Write down the amount financed. The amount financed is also called the principal amount. It is the amount of money that the lending institution laid out for you to get the car. The interest is calculated based on the principal amount.
Find your interest percentage. Look through your car loan papers and find the line where it says "percent interest." That's the number you'll need to determine the total interest payment for the life of the loan.
Determine the loan length. Auto loans are generally anywhere from 2 to 5 years (some are longer). Be sure to convert the annual term into months. For example, convert the 5-year term into 60 months for calculation purposes.
Use an online calculator. Websites such as bankrate.com and cars.com have auto loan interest rate calculators. Once you've assembled all of the interest rate calculation information, it's best to plug the numbers into an online calculator. You can manually calculate your car loan interest with a complicated formula. However, unless you're a mathematician and enjoy such calculations, an online calculator will work just fine.
Once you've determined the interest rate for the life of your auto loan, you might want to shop around for a better rate or do everything in your power to pay it off early.