Auto Loan Calculator
Last Updated:
Calculate your exact monthly car payment including total interest and total cost of ownership.
Monthly Car Payment
$0.00
📐 Formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1] where P = loan amount, r = monthly rate, n = number of payments
How to Use the Auto Loan Calculator
Enter the vehicle price
Input the total financed amount after down payment. Only enter the amount you're borrowing — for a $28,000 car with $3,000 down, enter $25,000.
Set the interest rate
Enter your APR. New car averages run 6–8%; used car averages 8–14% — depending heavily on credit score. Get pre-approved by your bank or credit union before visiting the dealership.
Choose the loan term
Select 24, 36, 48, 60, or 72 months. Shorter terms mean higher payments but substantially less total interest — compare this figure carefully across term lengths.
Review total interest paid
This is the true cost of borrowing, not the monthly payment. A 72-month loan can cost $2,500–$4,000 more in total interest than a 48-month on the same balance.
What Determines Your Auto Loan Rate?
Your APR is primarily driven by your credit score. Excellent credit (720+) typically qualifies for 5–7% on new cars. Good credit (670–719) sees 7–10%. Fair credit (580–669) faces 10–16%. Below 580 may see rates of 16–25% or require a co-signer. A 200-point score difference can mean $3,000–$5,000 extra in total interest on a $25,000 loan. Credit unions consistently offer 1–2% lower rates than dealership financing for identical borrower profiles — compare both before signing.
The Hidden Cost of Long Loan Terms
Dealers often advertise monthly payments rather than total cost, making longer terms appear attractive. A $28,000 car at 7% over 48 months costs $670/month and $4,160 total interest. The same car over 72 months costs $478/month but totals $6,416 in interest — $2,256 more. Additionally, 72-month loans leave you underwater (owing more than the car's value) for most of the term, creating financial risk if the vehicle is totalled or you need to sell. Most financial advisors recommend keeping auto loans to 48 months or fewer for used vehicles.
How to Calculate an Auto Loan Payment by Hand: Worked Example
Every auto loan quote comes from the standard amortization formula: M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]. Take a $35,000 loan at 6.9% APR and compare two terms.
48 months: the monthly rate is 0.069 ÷ 12 = 0.00575. Plugging in gives M = $836.50, and total interest of 48 × $836.50 − $35,000 = $5,151.79.
72 months: same rate, longer exponent. M = $595.04, but total interest climbs to $7,842.59.
The 72-month loan feels $241 a month cheaper, yet costs $2,691 more — and that gap widens in practice because longer terms usually carry higher rates than the same borrower would get at 48 months. The monthly payment is the price of the loan's convenience; total interest is the price of the loan.
What does the 20/4/10 rule say you can afford?
A common affordability screen: put at least 20% down, finance for no more than 4 years, and keep all monthly vehicle costs (payment, insurance, fuel) under 10% of gross income. On a $75,000 salary that caps vehicle costs near $625 per month — which, at 6.9% over 48 months, supports roughly a $25,000–$28,000 loan once insurance and fuel are counted. The rule is conservative by design; it exists to prevent the car from crowding out retirement savings.
How Do You Avoid Being Upside Down on a Car Loan?
Why do long loans create negative equity?
A new vehicle typically loses 20% of its value in year one, while a 72- or 84-month loan retires principal slowly in the early months (most of each payment is interest at first). The result: for two to three years the loan balance exceeds the car's market value. If the car is totaled or you need to sell during that window, you owe the difference in cash. A larger down payment or shorter term keeps the balance under the depreciation curve from day one.
Should you finance through the dealer or a bank?
Get pre-approved by a bank or credit union before visiting the dealer, then let the dealer try to beat that rate. Dealer financing is sometimes genuinely cheaper (captive lenders subsidize rates to move inventory), but without an outside quote you have no benchmark — and the finance office knows it. Compare offers on APR and total interest using the calculator above, never on monthly payment alone, since stretching the term can make an expensive loan look cheap.
Frequently Asked Questions
Sources & Methodology
Calculations are based on the most current publicly available data from authoritative government and industry sources: