Car Loan Calculator
Calculate your exact monthly auto loan payment after factoring in down payment and trade-in value, and see the total interest you'll pay over the loan term. Use it before visiting a dealership to know your budget.
About this calculator
Monthly auto loan payments are calculated using the standard amortizing loan formula. The principal is first determined by subtracting your down payment and trade-in value from the vehicle price: principal = vehiclePrice − downPayment − tradeValue. The monthly payment is then: M = principal × r × (1 + r)^n / ((1 + r)^n − 1), where r = loanRate / 100 / 12 (monthly interest rate) and n is the loan term in months. This formula ensures the loan is fully paid off at the end of the term with equal monthly payments. Total interest paid = (M × n) − principal. A longer loan term lowers the monthly payment but significantly increases total interest cost, which is a key trade-off to evaluate.
How to use
Say you buy a $28,000 car, put $3,000 down, have a $2,000 trade-in, and finance at 6% APR over 60 months. Principal = $28,000 − $3,000 − $2,000 = $23,000. Monthly rate r = 6 / 100 / 12 = 0.005. Payment = 23,000 × 0.005 × (1.005)^60 / ((1.005)^60 − 1) = 115 × 1.3489 / 0.3489 ≈ $444.88/month. Total paid = $444.88 × 60 = $26,693. Total interest = $26,693 − $23,000 = $3,693.
Frequently asked questions
How does the loan term length affect my monthly car payment and total interest?
A longer loan term reduces your monthly payment but increases the total interest you pay because interest accrues over more months. For example, financing $20,000 at 7% APR over 48 months costs about $479/month and $2,990 in interest, while stretching to 72 months drops the payment to $341/month but total interest climbs to $4,548. Many buyers focus only on the monthly payment, inadvertently paying thousands more for the same vehicle. Choosing the shortest term your budget allows minimizes total cost.
What is a good interest rate for an auto loan in 2024?
Auto loan rates vary significantly based on your credit score, loan term, and whether the car is new or used. Borrowers with excellent credit (720+) typically qualify for rates between 5% and 8% on new vehicles, while used car loans generally carry rates 1–3 percentage points higher. Those with fair credit (580–669) may see rates of 12–18% or more. Getting pre-approved by your bank or credit union before visiting a dealership gives you a competitive benchmark and negotiating leverage. Always compare the dealer's financing offer against outside lenders.
How much should I put down on a car to avoid being underwater on the loan?
Financial experts generally recommend a down payment of at least 20% on a new car and 10% on a used car. Cars depreciate quickly — a new vehicle can lose 15–20% of its value in the first year — so a small down payment can leave you owing more than the car is worth, a situation called being 'underwater' or 'upside-down.' Being underwater is problematic if you need to sell or if the car is totaled, since insurance only pays market value. A larger down payment also reduces the principal, lowering both your monthly payment and total interest paid.