Car Loan Calculator
Enter the vehicle price, your down payment, the interest rate, and your preferred loan term. The calculator shows your monthly payment and total loan cost.
Monthly payment:
Total interest paid:
Total cost of vehicle:
Car Loan Calculator — Estimate Your Monthly Auto Payment
Buying a car is one of the biggest purchases most people make. Whether you are buying new or used, financing through a dealer or a bank, understanding the true cost of your auto loan before you sign is essential. This car loan calculator breaks down your monthly payment, total interest paid, and the complete cost of vehicle ownership including your down payment.
How Auto Loan Payments Are Calculated
Car loan payments use standard amortization — the same formula used for mortgages and personal loans. Each monthly payment covers the interest on the remaining loan balance plus a portion of the principal:
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- P = Loan amount (vehicle price minus down payment)
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of monthly payments (loan term in months)
Worked Example
Vehicle price: $35,000 | Down payment: $5,000 | Rate: 7% | Term: 60 months
- Loan amount: $35,000 − $5,000 = $30,000
- Monthly rate: 7% ÷ 12 = 0.5833%
- Monthly payment: $30,000 × [0.005833 × (1.005833)^60] / [(1.005833)^60 − 1] = $594
- Total paid: $594 × 60 = $35,640
- Total interest: $35,640 − $30,000 = $5,640
- Total cost: $35,640 + $5,000 down = $40,640
Impact of Loan Term: $30,000 at 7% Interest
| Loan Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 24 months | $1,343 | $2,242 | $32,242 |
| 36 months | $927 | $3,382 | $33,382 |
| 48 months | $718 | $4,477 | $34,477 |
| 60 months | $594 | $5,640 | $35,640 |
| 72 months | $513 | $6,913 | $36,913 |
| 84 months | $454 | $8,157 | $38,157 |
Stretching from a 36-month to a 72-month loan reduces the monthly payment by $414 but adds $3,531 in total interest — a significant trade-off. The longer the loan, the more you pay in total.
Auto Loan Rates by Credit Score
Your credit score is the single biggest factor determining your interest rate. Here are approximate ranges for new car loans as of recent market conditions:
| Credit Score Range | Credit Tier | Approx. New Car Rate | Approx. Used Car Rate |
|---|---|---|---|
| 781–850 | Super Prime | 5.0–5.5% | 6.5–7.5% |
| 661–780 | Prime | 6.0–7.0% | 8.0–9.5% |
| 601–660 | Near Prime | 8.0–10.0% | 11.0–13.0% |
| 501–600 | Subprime | 11.0–14.0% | 14.0–18.0% |
| 300–500 | Deep Subprime | 14.0–18.0%+ | 18.0–24.0%+ |
Improving your credit score before applying for a car loan can save thousands of dollars over the life of the loan.
New vs. Used Car Loans
Used car loans typically carry higher interest rates than new car loans for two reasons: the vehicle depreciates faster and poses more risk to the lender if you default. Used cars are also harder to value accurately, which creates additional risk.
However, the lower purchase price of used vehicles often more than offsets the higher rate. A 3-year-old vehicle typically costs 30–40% less than the same new model, which is a much larger savings than the interest rate difference.
The Risk of Long-Term Loans: Being "Underwater"
A 72 or 84-month auto loan may seem attractive because the monthly payment is lower, but it comes with a significant risk: negative equity (being "underwater" or "upside down" on your loan).
New cars lose 15–25% of their value in the first year and typically drop 50–60% in value over 5 years. With a 72 or 84-month loan at a low down payment, it is very common to owe more than the car is worth for 3–4 years. If you need to sell, trade in, or if the car is totaled, you could be stuck paying the difference out of pocket.
If possible, stick to loan terms of 48–60 months and put down at least 10–20% to stay ahead of depreciation.
Tips to Get the Best Auto Loan Rate
- Check your credit score first — Know where you stand before visiting a dealership
- Get pre-approved — Pre-approval from a bank or credit union gives you negotiating power with dealers
- Credit unions offer lower rates — On average, credit unions charge 1–2% less than banks
- Negotiate the price, not the payment — Dealers can manipulate monthly payments by extending the term; focus on the total price
- Avoid unnecessary add-ons — Extended warranties, GAP insurance, and dealer fees can add thousands to your financed amount
- Make a larger down payment — Reduces the loan amount, monthly payment, total interest, and risk of negative equity
Related Tools
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- Loan Repayment Calculator
- Net Worth Calculator
- Gas Mileage Calculator
- Driving Cost Calculator
Sources
Frequently Asked Questions
What is the average car loan interest rate?
As of recent data, average auto loan rates range from roughly 5–7% for borrowers with excellent credit (prime and super prime) to 11–18% or higher for borrowers with poor credit (subprime). New car rates are generally 1–3% lower than used car rates. Getting pre-approved through a bank or credit union often yields better rates than dealer financing.
How long should a car loan be?
Financial experts generally recommend keeping auto loan terms to 48–60 months. Longer loans (72–84 months) lower the monthly payment but significantly increase total interest paid and create a high risk of negative equity — owing more than the car is worth — because vehicles depreciate faster than the loan balance decreases.
How much should I put down on a car?
A general rule of thumb is to put down at least 10% on a new car and 20% on a used car. A larger down payment reduces your monthly payment, total interest, and the risk of being underwater (owing more than the car's value). It can also help you qualify for a lower interest rate.
Is it better to finance through a dealer or a bank?
Financing through your own bank or credit union is usually cheaper. Credit unions, in particular, often offer rates 1–2% lower than dealer financing. However, dealers sometimes offer promotional rates (0% or 1.9% APR) on new vehicles that can beat bank rates. Always get pre-approved first so you have a benchmark to compare the dealer's offer against.