Auto Loan Calculator
Estimate your exact monthly car payment after accounting for your down payment, trade-in value, and APR. Use it when shopping dealerships to know your budget before negotiating.
About this calculator
An auto loan is a simple installment loan, so the monthly payment follows the standard amortization formula: M = L × (r × (1+r)^n) / ((1+r)^n − 1), where L is the net loan amount (vehicle price minus down payment minus trade-in value), r is the monthly interest rate (APR ÷ 100 ÷ 12), and n is the loan term in months. The trade-in value effectively acts as an additional down payment, reducing the amount you must finance. A shorter loan term means higher monthly payments but significantly less total interest paid. Conversely, stretching to 72 or 84 months lowers monthly costs but increases the risk of being 'underwater' — owing more than the car is worth as it depreciates.
How to use
Say a car costs $32,000, you put $4,000 down, have a $3,000 trade-in, the APR is 5.9%, and the term is 60 months. Net loan L = 32,000 − 4,000 − 3,000 = $25,000. Monthly rate r = 5.9/100/12 ≈ 0.004917. M = 25,000 × (0.004917 × 1.004917^60) / (1.004917^60 − 1) = 25,000 × (0.004917 × 1.3441) / (1.3441 − 1) = 25,000 × 0.006608 / 0.3441 ≈ $480.26 per month. Total paid = $480.26 × 60 = $28,815.60, meaning $3,815.60 in total interest.
Frequently asked questions
How does my credit score affect my auto loan interest rate?
Lenders use your credit score as a primary indicator of repayment risk, and even a small rate difference has a large impact over 60–72 months. Borrowers with scores above 720 typically qualify for rates below 4–5% APR, while scores below 600 can face rates of 12–20% or higher. On a $25,000 loan over 60 months, moving from 5% to 15% APR adds roughly $7,000 in total interest. Improving your credit score before applying — even by 20–30 points — can save hundreds of dollars annually.
What is a good debt-to-income ratio when applying for a car loan?
Most lenders prefer your total monthly debt obligations, including the new car payment, to stay below 36–40% of your gross monthly income. For the car payment alone, a common guideline is the 20/4/10 rule: 20% down, loan term no longer than 4 years, and total vehicle costs (payment plus insurance) under 10% of gross monthly income. Keeping the payment modest relative to income reduces the risk of default and improves your chances of approval at competitive rates.
Why does a longer loan term cost more money even if the monthly payment is lower?
A longer term means the lender charges interest for more months on a balance that decreases more slowly. For example, a $25,000 loan at 6% APR costs about $2,324 in total interest over 48 months but $3,999 over 72 months — $1,675 more just for the convenience of lower monthly payments. Additionally, cars depreciate quickly, and long-term loans increase the risk of negative equity, where you owe more than the vehicle is worth. This can create financial problems if you need to sell or your car is totaled.