Weekly car loan repayments calculator

The calculator above is set to weekly, with a $20,000 loan over five years at 11.95% a year. That rate is only an example. Use the rate on your quote, and remember that it is an estimate, not an offer of credit.

Most people think about money in weeks or pay cycles, not in loan terms. So this page works the other way round too: what weekly amount can you carry, and what does that let you borrow?

How the weekly figure is worked out

The calculator uses the standard formula for a loan repaid in equal instalments. A year has 52 weeks, so the yearly rate is split into 52 parts, and a five-year loan has 260 payments. Each payment covers the interest on what you owe and pays off some of the loan. The payment stays the same from the first week to the last.

For the starting example, the weekly rate is 11.95% divided by 52, about 0.23% a week. Through the formula, 260 payments of $102.26 pay off $20,000 and cost $6,588.80 in interest. The total repaid is $26,588.80.

A common mistake: dividing the monthly figure by four

A month is not four weeks. It is about 4.33. On the same loan, the monthly payment is $444.38.

• Divide by four: $111.10 a week. That overstates the real figure by about $8.84.
• Multiply by 12 and divide by 52: about $102.55. That is a good guide.
• The exact weekly payment from the calculator is $102.26.

Over a year the first method has you setting aside nearly $460 more than the loan needs. It errs on the safe side, but it makes a car look dearer than it is, and it can push you to buy a cheaper car than you could afford.

What a car costs a week

Here is the weekly payment on different loan sizes. All use a five-year term and an example rate of 11.95%, paid weekly. They are examples, indicative only.

The payment scales with the amount. Double the loan and the weekly payment doubles. That makes it easy to estimate: every $1,000 borrowed adds roughly $5.11 a week on this term and rate.

What the term does to the week

Keeping the loan at $20,000 and the rate at 11.95%, here is what changes when you change the number of years.

Stretching from three years to seven lowers the weekly payment by $71.55. It also adds $5,718.05 in interest. A lower weekly figure is tempting, but it is paid for in the total. There is a longer discussion in car finance with low repayments.

What the rate does to the week

Same $20,000, same five years, weekly payments.

The rate moves the weekly payment by only a few dollars for each step. It moves the total interest by more than $1,100 a step. If you are comparing quotes, look at the total repaid, not only the weekly amount. The car loan interest calculator is built for that comparison.

Working backwards from a weekly budget

Say you can set aside $100 a week for the repayment. At an example rate of 11.95%, that supports about this much borrowing:

• 3 years: about $13,100
• 4 years: about $16,500
• 5 years: about $19,600
• 6 years: about $22,300
• 7 years: about $24,600

And if you can manage $150 a week, you could borrow about $19,600 over three years, $29,300 over five or $37,000 over seven.

Two things to remember. First, these are the loan amounts, not car prices. A deposit or trade-in is added on top, and fees added to the loan come off the top. Second, a longer term lets you borrow more for the same weekly amount, but it also means a higher total cost and a longer time owing money on a car that is losing value. Try the amounts yourself above: put your budget in, then adjust the car price until the weekly figure matches.

Leave room in the budget

A weekly repayment is only part of what a car costs. Registration, warrant of fitness, insurance, fuel and servicing all come from the same pay. Check the repayment still works after rent or mortgage, food, power and your other debts, with a buffer for the weeks when something unexpected turns up. If the figure is tight on paper, it will be tighter in practice.

If a weekly amount looks too high, the fixes with the most effect are a cheaper car, a bigger deposit, or a lower rate. A longer term helps the weekly figure but costs more overall. If repayments are already a struggle, read what to do when you can’t afford car repayments and talk to your lender early.

Matching payments to your pay

Ask the lender if payments can fall on your pay day. If you are paid fortnightly or monthly, a weekly loan means you are setting money aside between pays. The calculator can show you the same loan on a fortnightly or monthly schedule so you can see the numbers either way. On the $20,000 example, fortnightly payments are $204.70 and monthly payments are $444.38. Total interest is $6,588.80 weekly, $6,611.09 fortnightly and $6,663.03 monthly, so the differences are small.

Weekly payments and irregular income

If your hours or pay change from week to week, a fixed weekly repayment needs a little more care. Two simple habits help.

• Size the payment to a quiet week. Look at the lowest pay you had in the last few months, and check the repayment and your essentials still fit.
• Keep a small buffer. Having one or two weeks of repayments set aside means one short pay does not put the loan behind.

The weekly figure on the calculator is the same each week, so a buffer is the easiest way to cope with a bad week. If you do fall behind, tell the lender early. See what to do when you can’t afford car repayments.

Getting a real quote

A calculator tells you what a loan could cost. To see what a lender would actually offer you, you need an application. Our check is a referral service, not a lender or a dealer. It sends one application and a soft credit check to a panel of NZ lenders. Nobody can promise approval, and lenders decide case by case. Read the disclosure page for how it works and how we are paid.

Sources

• Consumer Protection NZ: loan for your car for disclosure statements and what to check before signing
• Sorted for budgeting and borrowing basics