Car Loan Myth 4: Total Interest = Loan Amount x Interest Rate
Car Loan Myth 4: Total interest = loan amount x interest rate - Not True
Longer Version of the Video:
• 5 Car Loan Myths Explained with Googl...
Other Car Loan Myths:
Myth 1: Lowest monthly payment is always better
Myth 2: Loans with the same monthly payment cost the same
Myth 3: Loan amount includes interest
Myth 4: Total interest = loan amount x interest rate
Myth 5: Interest rate and APR are the same
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Myth 1: Lowest monthly payment is always better
Lower monthly payment doesn't always mean less financing; APR and loan term impact total interest.
Myth 2: Loans with the same monthly payment cost the same in total interest
Different variables affect total interest despite identical monthly payments.
Myth 3: Loan amount includes interest
The amount of the car loan you borrow does NOT include interest. Interest is on TOP of the loan amount, which is the extra cost for lending you money.
Myth 4: Total interest you pay on a loan = the amount you borrow x the interest rate
You also have to consider the number of years for your loan and the amortized monthly payment. To learn what is amortized payments, watch this video: • How to Calculate Mortgage Payments an...
Myth 5: Interest rate and APR are the same
APR accounts for additional fees and charges and is used to compare car loans from different dealers or banks as apples to apples.
You can use different APR calculators:
https://www.experian.com/blogs/ask-ex...
https://www.calculatorsoup.com/calcul...
https://www.inchcalculator.com/apr-ca...
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