In this video you will create a summary table and perform calculations for the fixed aspects of your loan, including APR and term length.
Then, you will create a table of loan amounts.
When you take on a car loan, you pay money to borrow money.
The amount you borrow is called the principal. The amount a lender charges you to borrow the money is called the APR or annual percentage rate.
You’ll often see lenders display rates “as low as” a certain APR.
But just because a company advertises rates “as low as” 3 percent APR does not mean you will actually receive that rate.
The shorter the loan term and the better your credit score, the better rate you can get.
Create a summary table in your spreadsheet so that you can easily see the APR and loan terms.
Freeze seven rows at the top of the sheet.
Later, you will add a loan amount table to calculate your monthly payment and interest amount.
Select Row 7 and freeze the spreadsheet to the current row.
Now you have space for a summary table.
Type “Rate, APR.”
Below that, type “Term.”
The term is the time it will take you to pay off the loan.
Auto loan terms are usually between 3 and 6 years.
Perform a quick internet search for the current average APR and enter it beside “Rate.”
Then, select a term that seems appropriate.
You can tinker with these values later to see how different rates and terms affect your monthly payments and total interest.
Then, add a row for the number of payments you will make on the loan.
You will pay once a month for the length of your loan term.
To find the number of payments, multiply the lease term in years by 12.
Type “equals” and select the cell with the number of years.
Then, select the multiplication symbol--the asterisk on the 8 key.
Then, type “12” and press enter.
Finally, add a row for “Monthly APR.”
This is the rate of interest you pay per month.
To do this, divide the annual interest rate by 12.
Type “equals,” Select the APR cell; Type slash 12 percent; And press Enter.
Then, change the format of this number to a percent.
Now that you have filled in some of the loan terms, continue to the next video to start determining a reasonable loan amount.
Now, it’s your turn Create rows for annual percentage rate and loan term in years.
Multiply the loan term by 12 to calculate the loan term in months.
Divide the APR by 12 to calculate the monthly percentage rate for your loan.