Car Loan Calculator

Loan term is the single biggest driver of total interest cost. On a $30,000 loan at 6.5% APR, a 36-month term costs $3,092 in total interest with payments of $919/month. Stretch to 60 months and total interest jumps to $5,225 with payments of $587/month. At 72 months, interest reaches $6,380 with payments of $506/month. At 84 months, you pay $7,552 in interest with payments of $447/month. The monthly savings between 60 and 84 months is $140, but it costs an extra $2,327 over the life of the loan. More critically, longer loans create negative equity risk — vehicles depreciate approximately 20% in the first year and 15% per year thereafter. On an 84-month loan with less than 10% down, you may owe more than the car is worth for the first 3-4 years. If the car is totaled or you need to sell it, you would have to pay out of pocket to close the loan. The sweet spot for most buyers is 48-60 months, balancing affordable payments with reasonable total cost.

The financed amount on a car loan is almost never equal to the vehicle price. Sales tax averages 6-7% nationally but reaches 10%+ in cities like Chicago (10.25%) and Seattle (10.35%). On a $35,000 vehicle, that is $2,100 to $3,600 added to your loan. Registration and title fees range from $50 in some states to over $500 in others. Dealer documentation fees vary from $0 (capped by law in some states) to $800 or more. If you roll negative equity from a trade-in into the new loan, that amount also gets financed at the new loan's rate. Conversely, your loan amount decreases by any down payment and positive trade-in equity. The common recommendation is to put at least 20% down on new cars and 10% on used cars to avoid being underwater. Gap insurance, which covers the difference between the loan balance and the car's actual cash value in a total loss, costs $20-40/month and is worth considering if your loan-to-value ratio exceeds 100%.

Your credit score is the primary factor determining your auto loan APR. As of 2024, average rates for new cars range from about 5.5% for excellent credit (750+) to 14%+ for subprime borrowers (below 600). A 3-percentage-point difference on a $30,000 60-month loan translates to roughly $2,400 in additional interest. To secure the best rate, check your credit report for errors at least 30 days before shopping, get pre-approved from your bank or credit union before visiting dealerships (credit unions often offer rates 1-2% below banks), and limit your rate shopping to a 14-day window so multiple inquiries count as a single hard pull. Never share your monthly budget with a dealer — they will stretch the term to hit your target payment while maximizing interest revenue. Instead, negotiate the total out-the-door price first, then discuss financing separately. If offered 0% dealer financing, compare it against a cash rebate plus your own lower-rate loan — sometimes the rebate yields a lower total cost even with interest charges.

A car loan is an amortizing loan, meaning each fixed monthly payment is split between interest on the remaining balance and principal that reduces what you owe. Early payments are mostly interest; later payments are mostly principal.

The payment itself comes from one formula: Monthly = P x r(1+r)^n / ((1+r)^n - 1), where P is the amount financed, r is the monthly rate (APR / 12 / 100), and n is the number of months.

Because most U.S. auto loans use simple interest, interest accrues only on the outstanding principal. The Consumer Financial Protection Bureau (CFPB) notes this is why paying extra toward principal shortens the loan and cuts total interest.

• Principal - the amount you borrowed and still owe
• Interest - the lender's charge on the current balance
• Term (n) - total number of scheduled payments

The Federal Reserve publishes average auto-loan terms in its G.19 Consumer Credit release.

Start by entering your negotiated out-the-door price, not the sticker price. Suppose you agree on a $28,000 used SUV, put $4,000 down, have no trade-in, and your credit union quotes 8% APR for 60 months, with 6% sales tax and $400 in fees.

Follow these steps in the calculator above:

• Enter $28,000 as the vehicle price
• Enter $4,000 as the down payment and $0 trade-in
• Enter 8% APR and select the 60-month term
• Set sales tax to 6% and fees to $400

The tool computes tax of $1,680, a financed amount of about $26,080, and a monthly payment near $529. It then shows total interest and your payoff date.

Change only the term to 72 months to watch the monthly payment fall while total interest rises - the trade-off the CFPB warns buyers to weigh before signing.

Your credit score is the largest single factor a lender uses to set your APR. Borrowers with excellent credit routinely receive rates several percentage points below subprime borrowers on an identical vehicle and term.

According to the Consumer Financial Protection Bureau, even a difference of a few points of APR can add thousands of dollars over a five- or six-year loan, so improving your score before shopping pays off directly.

Lenders generally group applicants into tiers:

• Prime / super-prime - the lowest advertised rates
• Near-prime - moderately higher APRs
• Subprime / deep subprime - the highest rates and strictest terms

Because tier rates shift with the Federal Reserve's rate environment, check current lender quotes rather than assuming a fixed number. The Fair Credit Reporting Act lets you pull free reports at AnnualCreditReport.com to fix errors before applying.

The most expensive car-loan mistake is shopping by monthly payment instead of total cost. Dealers can hit almost any target payment by stretching the term, which quietly inflates the interest you pay.

The Consumer Financial Protection Bureau and the Federal Trade Commission (FTC) flag several recurring errors:

• Financing based on payment, not price - always negotiate the out-the-door price first
• Rolling negative equity forward - carrying old debt into a new loan starts you underwater
• Skipping pre-approval - dealer financing is often marked up over your best available rate
• Ignoring add-ons - service contracts and GAP products get financed at your loan's APR
• Choosing an 84-month term for a small monthly savings - depreciation outpaces payoff

Avoiding these keeps your loan-to-value ratio healthy. The FTC's Buying and Owning a Car guidance recommends reviewing every line of the contract before signing, since verbal promises are not binding.

Refinancing replaces your current auto loan with a new one, usually to secure a lower APR or a different term. It makes financial sense when rates have dropped, your credit has improved, or you were placed in a subprime tier at purchase.

Refinancing tends to help most when:

• Your credit score has risen meaningfully since the original loan
• Market rates have fallen, which you can track via the Federal Reserve G.19 data
• You still owe substantially more than a few final payments

Be cautious about extending the term just to lower the payment - the Consumer Financial Protection Bureau notes this can increase total interest even at a lower rate. Also confirm your existing loan has no prepayment penalty and that the car is not already worth less than the balance, since lenders limit refinancing on upside-down loans.

Used-car loans almost always carry higher APRs than new-car loans for the same borrower. Lenders view older vehicles as riskier collateral because they depreciate faster and have less predictable resale value.

Key differences to expect:

• Higher APR on used cars - typically a point or two above comparable new-car rates
• Shorter maximum terms - many lenders cap used-car loans below the longest new-car terms
• Stricter age and mileage limits - some lenders will not finance vehicles beyond a certain age

New cars may qualify for promotional or manufacturer-subsidized financing, but the Consumer Financial Protection Bureau advises comparing a low promotional APR against any cash rebate you would forfeit to take it.

Because new vehicles lose roughly 20% of value in the first year, a larger down payment on a new car helps you avoid the negative-equity window that longer terms create.

A widely used guideline keeps total transportation costs under about 15-20% of your take-home pay, covering the loan payment plus insurance, fuel, and maintenance - not just the payment alone.

To estimate a safe budget:

• Start with monthly net (take-home) income, not gross salary
• Subtract expected insurance, fuel, and maintenance costs
• Cap the remaining amount as your maximum loan payment
• Work backward with this calculator to find an affordable price

The Consumer Financial Protection Bureau recommends pairing an affordable payment with a down payment near 20% and a term of 60 months or less to limit negative equity.

Remember that insurance premiums vary by driver, vehicle, and location, so get a real quote before committing. Building an emergency buffer, as the CFPB suggests, protects you if income changes mid-loan.

Your down payment and trade-in value both reduce the amount you finance, while negative equity increases it. Financing less principal directly lowers your monthly payment and total interest.

Here is how each lever works:

• Down payment - cash paid at signing that immediately shrinks the loan
• Trade-in equity - the amount your old car is worth above what you still owe on it
• Negative equity - the shortfall when you owe more on a trade-in than it is worth

When a trade-in has negative equity, that gap is typically rolled into the new loan and financed at the new APR, a practice the Consumer Financial Protection Bureau warns can leave you underwater for years.

In many states, sales tax applies to the price after trade-in credit, so a trade-in can also cut your tax bill. Confirm the rule with your state's department of motor vehicles, since it varies.