Auto Loan Calculator – Car Payment Estimator
Calculate monthly car payments, total interest, and total cost of an auto loan.
How Auto Loan Calculations Work
An auto loan is an installment loan where you borrow a fixed amount to buy a vehicle and repay it in equal monthly payments over the loan term. Your monthly payment depends on four variables: loan amount (principal), interest rate (APR), loan term (months), and any down payment or trade-in value.
The standard formula: Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P = principal, r = monthly interest rate (APR/12), and n = number of payments.
New vs Used Car Loans: What to Expect
New car loans typically offer lower interest rates (3–7% APR) because new vehicles retain value better and are seen as lower-risk collateral. Used car loans usually carry higher rates (5–12% APR) and shorter maximum terms.
Dealers often advertise very low promotional APRs (0–1.9%) but may build those savings into a higher vehicle price. Always compare the total cost of the loan, not just the monthly payment or advertised rate.
Total Cost vs Monthly Payment
A longer loan term lowers your monthly payment but dramatically increases total interest paid. A $25,000 loan at 6% APR: over 36 months you pay $761/month ($27,396 total); over 72 months you pay $415/month ($29,880 total) — $2,484 more in interest for the convenience of a lower payment.
Aim for the shortest term you can comfortably afford. As a general rule, avoid car loans over 60 months.
Frequently Asked Questions
What is a good APR for a car loan?
With excellent credit (750+): 3–5% new, 5–7% used. Good credit (700–749): 5–7% new, 7–10% used. Fair credit (650–699): 7–12%. Anything above 15% is considered high — consider improving your credit first or saving a larger down payment.
How much should I put down on a car?
A 20% down payment is traditionally recommended for new cars, 10% for used. This reduces your loan amount, monthly payment, and interest paid — and prevents you from being "underwater" (owing more than the car is worth).
Should I finance through the dealer or my bank?
Always get a pre-approval from your bank or credit union before visiting the dealer. Use that rate as a baseline — dealers sometimes offer better financing but also add margin. Having pre-approval gives you negotiating power.