Auto Loan Payment Calculator
Calculate the monthly payment on an auto loan given the loan amount, annual interest rate, and term in months. Use it to figure out whether a car is actually affordable on your monthly budget before walking into a dealership.
Last updated: May 2026
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About this calculator
The formula is the standard amortizing-loan equation rearranged: M = P × (r/12) ÷ (1 − (1 + r/12)^(−n)), where P is the loan principal, r is the annual interest rate as a decimal, and n is the loan term in months. The result is the fixed monthly payment that, applied for n months, drives the loan balance to zero. This is mathematically identical to the more commonly seen M = P × [r(1+r)^n] / [(1+r)^n − 1] — both produce the same payment. Each monthly payment splits between interest (computed on the remaining balance at the start of the month) and principal (the rest); early in the loan the interest share is large, and late in the loan principal dominates. Edge cases: a rate of 0% (rare manufacturer-promotional financing) breaks the formula via division by zero; for an interest-free loan, payment is just P ÷ n. A very short term (12 months) means most of each payment is principal; a long term (84 months, now common) means total interest paid can be substantial relative to the car's value. Auto-loan terms have crept upward over the past two decades — the average new-car loan in the US is now ~70 months, with many extending to 84 months — which lowers monthly payments but increases total interest and often results in being "underwater" on the loan (owing more than the car is worth) for years. The formula assumes the rate is the nominal interest rate, not APR; if you include fees rolled into the loan, APR is higher than the rate. For comparison shopping, always use APR.
How to use
Example 1 — 5-year auto loan. You're financing a $28,000 used SUV at 7.5% APR over 60 months. Enter 28000 for Loan Amount, 7.5 for Annual Interest Rate, and 60 for Loan Term. Result: approximately $561 per month. Verify: r/12 = 0.075/12 = 0.00625; (1.00625)^60 ≈ 1.4540; M = 28000 × 0.00625 / (1 − 1/1.4540) = 175 / (1 − 0.6878) = 175 / 0.3122 ≈ $560.5. ✓ Over the loan life you pay 561 × 60 = $33,660, of which $5,660 is interest. Example 2 — Long-term loan, lower rate. New car loan of $42,000 at 5.9% APR over 72 months. Enter 42000, 5.9, and 72. Result: approximately $694 per month. Verify: r/12 = 0.0590/12 ≈ 0.00492; (1.00492)^72 ≈ 1.4252; M = 42000 × 0.00492 / (1 − 1/1.4252) = 206.5 / (1 − 0.7016) = 206.5 / 0.2984 ≈ $692. ✓ Total paid: 694 × 72 = $49,968 with $7,968 in interest. The longer term made the monthly payment comfortable but added thousands in interest vs a 5-year term — typical of the tradeoff today's auto-loan structure forces on buyers.
Frequently asked questions
What is the difference between APR and interest rate on an auto loan?
The interest rate is what the lender charges on the outstanding loan balance, while APR (annual percentage rate) is the all-in cost of borrowing including loan origination fees, dealer fees rolled into the loan, and other upfront charges spread across the loan term. APR is always ≥ interest rate and is the figure lenders must disclose under federal Regulation Z so you can compare loans on equal footing. For auto loans specifically, the gap is typically 0.1–0.5 percentage points, smaller than for mortgages because auto loans have fewer fees. When comparing offers from multiple lenders or dealers, always use APR — a 6.0% rate with high fees can cost more than a 6.5% rate with no fees. Be especially careful with "0% APR" promotional financing: dealers usually require giving up a cash rebate that may be worth more than the interest savings, so always run the math both ways.
How does loan term affect total interest paid?
Longer terms reduce the monthly payment but increase total interest paid because each month's interest is charged on a balance that takes longer to come down. On a $30,000 auto loan at 7%: a 4-year term costs about $719/month and $4,500 total interest; a 6-year term costs $512/month but $6,860 total interest; a 7-year term costs $453/month and $8,030 total interest. The 7-year option saves $266/month over the 4-year version but costs an extra $3,500 in interest. Even worse, longer-term loans extend the period during which you're "underwater" — owing more on the loan than the car is worth — because cars depreciate faster than the loan balance falls. The cheaper-monthly-payment trap is a major reason many Americans end up rolling negative equity from one car loan into the next; choose the shortest term you can comfortably afford to minimize lifetime cost.
How much car can I afford?
A widely cited heuristic is the 20/4/10 rule: at least 20% down payment, no more than a 4-year loan, and total monthly transportation cost (loan payment + fuel + insurance + maintenance) under 10% of gross monthly income. By that standard, someone earning $80,000 gross has $667/month for total transportation, which after $200/month for fuel/insurance/maintenance leaves about $467/month for loan payments — supporting roughly a $20,000–$22,000 loan at typical rates. Most people exceed this guideline significantly — average new-car loans now cost $700+/month and run 72+ months — which works in the short run but crowds out retirement saving and emergency-fund building. A more aggressive optimization: buy used (2–4 years old) where the worst depreciation has already happened, finance for 36–48 months at most, and prioritize total cost of ownership over monthly payment.
What are the most common mistakes people make with auto loans?
The biggest is focusing on monthly payment instead of total cost — dealers will happily extend the loan term to make any monthly payment fit your budget, even if it costs $5,000+ extra in interest. The second is rolling negative equity from a previous loan into the new one, creating a longer cycle of being underwater. The third is accepting dealer financing without shopping multiple lenders — credit unions and online lenders often offer rates 1–3 percentage points lower than the dealer's preferred lender, saving $1,000–$3,000 over the loan. The fourth is bundling extras (extended warranties, GAP insurance, paint protection, fabric protection) into the financed amount without comparing prices elsewhere — extended warranties are typically 30–50% cheaper from a third party than from the dealer. The fifth is not negotiating the out-the-door price separately from financing — dealers profit on both, and combining them in negotiation lets them shift money between the two to look like they're giving a deal when they're not.
When should I not use this calculator?
Skip it for variable-rate auto loans (rare but exist), where the rate resets — the formula assumes a fixed rate. It is the wrong tool for lease payments, which use a different formula based on residual value and money factor rather than principal and APR; use a dedicated lease calculator. Do not use it for "balloon" auto loans where a large final payment is due at the end (sometimes marketed as low-monthly-payment loans); those need a balloon-loan calculator. It also doesn't handle "buy here, pay here" lots that use weekly or biweekly payment frequencies with simple interest rather than amortizing structures. For complete affordability assessment, pair this calculator with car total-cost-of-ownership tools (Edmunds True Cost to Own, AAA Your Driving Costs) that include insurance, depreciation, maintenance, and fuel — the loan payment is typically only 30–50% of the real cost of car ownership.