Auto Loan CalculatorYour monthly car payment, total interest and payoff schedule

How to use the Auto Loan Calculator

1. Enter the vehicle price you have agreed with the dealer or seller, before tax and fees.
2. Add your down payment and trade-in. If you still owe money on your trade-in, enter that too, because it gets added to the new loan.
3. Enter your state’s sales tax rate and fees. Most states tax only the difference between the new car price and your trade-in value.
4. Enter the APR from your lender’s offer and pick the loan term.
5. Read the results: the monthly payment, total interest, payoff date and a year-by-year schedule showing how your balance falls.

How a car loan payment is calculated

Almost all car loans are simple interest, fixed-rate installment loans. You borrow an amount (the principal), and you pay it back in equal monthly payments. Each payment covers that month’s interest first, and the rest reduces the balance.

Early in the loan, more of each payment goes to interest because the balance is high. As the balance shrinks, the interest share falls and more goes to principal. You can see this in the payoff schedule above: the principal paid each year rises while the interest falls.

The amount you finance is not just the sticker price. It is the price, plus sales tax and fees, minus your down payment and trade-in, plus anything you still owe on the trade-in. Dealer add-ons such as extended warranties, paint protection or GAP insurance also increase it if you roll them into the loan.

How the loan term changes what you pay

A longer loan lowers the monthly payment, but you pay interest for longer, and lenders often charge a higher rate on long terms. Here is how the term changes the cost of borrowing $30,000 at 7% APR:

Long loans also keep you upside-down for longer. A new car can lose 20% or more of its value in the first year, so with a small down payment and a 72 or 84 month term, you can owe more than the car is worth for several years. If the car is totaled or you need to sell, you would have to cover the difference.

What affects your interest rate

• Credit score. The biggest factor. Borrowers with excellent credit can get rates several points lower than those with fair or poor credit.
• New or used. Used car loans usually carry higher rates than new car loans.
• Loan term. Shorter loans often get lower rates.
• Down payment. A bigger down payment reduces the lender’s risk.
• Where you borrow. Credit unions often beat banks and dealer financing. Getting pre-approved before you visit the dealer gives you a rate to compare against.
• Manufacturer promotions. Automakers sometimes offer 0% to 3.9% APR on new models, often in place of a cash rebate.

Tips to lower the cost of your car loan

• Get pre-approved by a credit union or bank before shopping, so you can tell if the dealer’s offer is a good one.
• Negotiate the price first, then the financing. Focusing only on the monthly payment makes it easy to overpay.
• Put at least 10% to 20% down to avoid owing more than the car is worth.
• Choose the shortest term you can comfortably afford. Many advisers suggest no more than 48 to 60 months.
• Skip add-ons you do not need, or buy them separately rather than financing them.
• Pay extra when you can. On a simple interest loan, extra payments go straight to principal and cut the total interest.

The formula behind it

Here P is the amount financed, r is the APR divided by 12 (as a decimal), and n is the number of monthly payments. Some states tax the full price without a trade-in credit, and fees vary by state and dealer, so treat the result as an estimate and compare it with your lender’s figures.

Car loan facts

Frequently asked questions

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