Auto Loan Calculator
Estimate your monthly car payment based on vehicle price, down payment, trade-in value, interest rate, and loan term. Ideal for budgeting before visiting a dealership or comparing financing offers.
About this calculator
This calculator uses the standard amortizing loan formula to determine your fixed monthly payment. The principal borrowed equals the car price minus your down payment and trade-in value. The monthly payment formula is: M = P × (r × (1+r)^n) / ((1+r)^n − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (loan term in months). Each payment covers interest accrued on the remaining balance plus a portion of the principal. Early payments are interest-heavy; later payments retire more principal — this is called amortization. Understanding this formula helps you see how a lower rate or shorter term can save thousands in total interest paid.
How to use
Suppose a car costs $30,000, you put $4,000 down, have a $2,000 trade-in, an APR of 6%, and a 60-month term. Principal P = $30,000 − $4,000 − $2,000 = $24,000. Monthly rate r = 6% ÷ 12 = 0.005. M = 24,000 × (0.005 × 1.005^60) / (1.005^60 − 1) = 24,000 × (0.005 × 1.3489) / (1.3489 − 1) = 24,000 × 0.006745 / 0.3489 ≈ $463.85 per month. Over 60 months you pay $27,831, meaning $3,831 in total interest.
Frequently asked questions
How does a larger down payment affect my monthly auto loan payment?
A larger down payment directly reduces the loan principal, which lowers both your monthly payment and total interest paid. For example, increasing a down payment from $2,000 to $5,000 on a $25,000 car at 6% APR over 60 months saves roughly $55 per month. It also shortens the time you spend 'underwater' — owing more than the car is worth. Most lenders recommend at least 10–20% down to avoid negative equity situations.
What interest rate should I expect on a new car loan in 2024?
Interest rates on auto loans vary by credit score, lender, and loan term. Borrowers with excellent credit (750+) typically qualify for rates between 5–7% APR on new vehicles, while those with fair credit (600–650) may see rates of 10–15% or higher. Used car loans generally carry higher rates than new car loans. Shopping multiple lenders — including credit unions and online lenders — before visiting the dealership can save hundreds or thousands of dollars over the life of the loan.
Why does a longer loan term lower my monthly payment but cost more overall?
Stretching a loan over more months reduces each individual payment because you're spreading the principal across more periods. However, interest accrues on the outstanding balance every month, so a longer term means you pay interest for more months, increasing total cost significantly. A 72-month loan at 6% on $20,000 costs about $1,600 more in interest than a 48-month loan. Longer terms also increase the risk of negative equity, as the car depreciates faster than you pay down the balance.