Auto Loan Calculator

How the Auto Loan Calculator Works

Our auto loan calculator helps you estimate your monthly car payment by taking into account the car price, down payment, interest rate, and loan term. It also shows the total interest you'll pay over the life of the loan and the total cost of the vehicle, plus an amortization preview that breaks down each year's principal and interest.

Auto Loan Payment Formula

The monthly payment is calculated using the standard amortization formula:

M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]

Where:

• M = Monthly payment
• P = Loan amount (car price minus down payment)
• r = Monthly interest rate (annual rate ÷ 12)
• n = Total number of payments (loan term in months)

For example, consider a $28,000 loan (after a $7,000 down payment on a $35,000 car) at 6.5% interest for 60 months. The monthly rate is 0.065 ÷ 12 = 0.005417. Plugging those into the formula gives a monthly payment of about $548.35. Over 60 months you'd pay roughly $32,901 total, meaning about $4,901 in interest on top of the $28,000 you borrowed.

How Down Payment Affects Your Loan

The down payment is the single biggest lever you control at the dealership. A larger down payment shrinks the loan amount, which lowers your monthly payment and reduces total interest. It also helps you avoid being "upside down" — owing more than the car is worth — which can happen quickly because cars depreciate fastest in the first few years. A common guideline is to put down at least 20% on a new car and 10% on a used car.

Choosing the Right Loan Term

Auto loan terms typically range from 24 to 84 months. Shorter terms mean higher monthly payments but far less total interest, and you'll own the car outright sooner. Longer terms lower your monthly payment but cost more in interest and extend the period during which you may owe more than the vehicle's value. As a rule of thumb, try to keep your total auto loan cost (monthly payment × term) within a budget you can comfortably afford, and prefer the shortest term whose payment fits that budget.

Interest Rates and Your Credit Score

Auto loan rates depend heavily on your credit score. Borrowers with excellent credit (750+) often qualify for rates under 5%, while borrowers with fair or poor credit may see rates of 10% to 20% or more. Even a few percentage points make a large difference over a 60-month loan. Before you shop for a car, check your credit report, dispute any errors, and consider getting prequalified with several lenders so you can compare offers and use the best rate as a negotiating tool at the dealership.

New vs. Used Car Financing

Lenders typically offer lower interest rates on new cars because they're easier to value and carry less risk. Used car rates are usually 1 to 3 percentage points higher. However, a used car's lower purchase price often means a smaller loan and less total interest, even at a slightly higher rate. Run both scenarios through the calculator to see which gives you the lower total cost — and remember that a used car's depreciation has already been absorbed by the first owner.

Tips for Lowering Your Car Payment

• Increase your down payment to reduce the loan amount.
• Choose a shorter term if you can afford the higher payment — you'll save on interest.
• Improve your credit score before applying to qualify for better rates.
• Get prequalified with multiple lenders and compare APRs, not just monthly payments.
• Consider a used vehicle to lower the total amount you need to finance.
• Ask about autopay rate discounts — many lenders shave 0.25% to 0.50% off your rate.