Auto Loan Calculator
Shopping for a car? Enter the vehicle price, down payment, interest rate, and loan term to see your monthly payment and total cost including interest.
How Auto Loan Payments Are Calculated
Auto loans use simple interest, calculated monthly on the outstanding principal balance. Each payment covers interest first, then reduces the principal. Early in the loan, most of your payment goes to interest. Near the end, most goes to principal.
The payment formula accounts for the loan amount, interest rate, and number of months. A $30,000 loan at 6% for 60 months costs $580 per month. Stretch it to 72 months and the payment drops to $494, but you pay $1,568 more in total interest.
Sales tax increases the amount you finance. On a $35,000 car with 7% tax, you pay $2,450 in tax. If you finance the full amount, you pay interest on that tax for the life of the loan. Putting more down or paying the tax in cash saves money long-term.
The True Cost of a Car Loan
Most people focus on the monthly payment, but the total interest paid matters more for your financial health. A $30,000 loan at 6% for 60 months costs $4,799 in interest. You end up paying $34,799 for a $30,000 car.
Extending the loan to 72 months to lower the payment adds $1,568 to your interest bill. Raising the rate from 6% to 8% on that 60-month loan adds $2,100 in interest. These differences compound when you trade in the car and roll negative equity into your next loan.
The smartest move is to buy less car than you can afford and pay it off quickly. A 36-month loan saves thousands in interest compared to 72 months. Your monthly payment is higher, but you build equity faster and free up cash flow sooner to invest elsewhere.
Getting the Best Auto Loan Rate
Your credit score is the single biggest factor in your auto loan rate. Lenders see scores above 720 as excellent and offer their best rates. Scores between 680-719 get decent rates. Below 680, you pay significantly more.
Check your credit report before shopping. Fix errors and pay down credit card balances to improve your score. Even a 20-point increase can drop your rate by half a percent, saving hundreds over the loan term.
Shop multiple lenders before visiting the dealer. Credit unions and banks often beat dealer financing. Get pre-approved so you know your rate and can negotiate the car price separately. Dealers sometimes mark up the lender's rate to earn extra profit. Having your own financing gives you leverage and a baseline for comparison.
Frequently Asked Questions
How much should I put down on a car?
Aim for at least 20% down. This prevents going underwater on the loan and often qualifies you for better interest rates.
What's a good interest rate on a car loan?
Rates vary by credit score and loan term. As of 2024, excellent credit gets 4-6%, good credit 6-8%, fair credit 8-12%. New cars typically get lower rates than used.
Should I finance for 72 or 84 months?
Longer loans mean lower payments but much more interest. You also risk owing more than the car is worth. Stick to 60 months or less if possible.
Does my trade-in reduce the loan amount?
Yes. The trade-in value subtracts from the purchase price before calculating your loan. Make sure you get a fair trade-in offer by shopping multiple dealers.
Can I pay off my car loan early?
Most auto loans have no prepayment penalty. Paying extra toward principal saves interest. Just make sure your lender applies extra payments correctly.