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Question 18

When comparing loan offers, knowing the exact monthly payment helps you judge affordability and total interest. The amortization formula converts principal, APR, and term into a fixed monthly payment for standard fixed-rate installment loans. This is the same calculation lenders perform when quoting payments; verifying the arithmetic helps you avoid surprises and compare lenders objectively. The example below is a common small auto or personal loan size over a 5-year term.

What is the monthly payment on a $15,000 loan at 4% APR for 60 months (standard amortization)?

Did You Also Know...

By Wise Wallet

Choosing a shorter auto loan reduces total interest paid but increases monthly payments—tradeoffs between cost and cash flow matter.