🚗 Car Loan Calculator
Calculate your monthly auto loan payment, total interest cost, and view a complete amortization schedule. Factor in trade-in value, down payment, and sales tax.
| Year | Principal Paid | Interest Paid | Total Paid | Remaining Balance |
|---|
How to Calculate a Car Loan Payment?
A car loan calculator uses the standard amortization formula to determine your monthly auto payment based on the loan amount, interest rate (APR), and repayment term. The monthly payment remains constant throughout the loan, but the proportion allocated to principal versus interest shifts over time.
M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]Where:
P = Loan Principal (Vehicle Price − Down Payment − Trade-In + Tax)r = Monthly Interest Rate (APR ÷ 12 ÷ 100)n = Total Number of Monthly Payments (Loan Term in Months)
For example, financing a $30,000 vehicle at 6.5% APR over 60 months with no down payment:
- Monthly Rate: 6.5 ÷ 12 ÷ 100 = 0.005417
- Monthly Payment: $30,000 × [0.005417(1.005417)^60] ÷ [(1.005417)^60 − 1] ≈ $586.93
- Total Interest: ($586.93 × 60) − $30,000 = $5,215.80
- Total Cost: $30,000 + $5,215.80 = $35,215.80
How Loan Term Affects Your Monthly Payment & Total Interest
Choosing a longer loan term reduces your monthly payment but significantly increases the total interest you pay over the life of the loan. Here's a comparison for a $30,000 loan at 6.5% APR:
| Loan Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 24 months (2 yr) | $1,332.19 | $1,972.56 | $31,972.56 |
| 36 months (3 yr) | $918.52 | $3,066.72 | $33,066.72 |
| 48 months (4 yr) | $711.16 | $4,135.68 | $34,135.68 |
| 60 months (5 yr) | $586.93 | $5,215.80 | $35,215.80 |
| 72 months (6 yr) | $504.22 | $6,303.84 | $36,303.84 |
| 84 months (7 yr) | $445.27 | $7,402.68 | $37,402.68 |
What is a Good Auto Loan Interest Rate? (2024)
Auto loan rates vary based on your credit score, the vehicle type (new vs. used), and the loan term. Here are the current average rates in the United States:
| Credit Score Range | New Car APR | Used Car APR |
|---|---|---|
| Super Prime (781–850) | 5.61% | 7.43% |
| Prime (661–780) | 6.88% | 9.33% |
| Nonprime (601–660) | 9.43% | 13.92% |
| Subprime (501–600) | 12.84% | 18.95% |
| Deep Subprime (300–500) | 15.43% | 21.58% |
New vs. Used Car Financing: Key Differences
- New Cars: Lower interest rates (manufacturer incentives, 0% APR deals), longer warranty coverage, but faster depreciation in the first 2-3 years (20-30% value loss).
- Used Cars: Higher interest rates (1-3% more than new), shorter loan terms recommended, but slower depreciation and lower purchase price. Certified Pre-Owned (CPO) vehicles often qualify for near-new financing rates.
5 Tips to Get the Best Car Loan Deal
- Get pre-approved from your bank or credit union before visiting the dealership. This gives you a baseline rate to negotiate against.
- Make the largest down payment you can afford. A 20% down payment reduces your loan amount, lowers monthly payments, and helps you avoid being upside down.
- Choose the shortest term you can comfortably afford. A 48- or 60-month loan saves thousands in interest compared to 72- or 84-month terms.
- Check your credit report for errors before applying. Even a 20-point credit score improvement can save you 1-2% on your APR.
- Negotiate the vehicle price separately from the financing. Dealers often mark up the buy rate by 1-3% as a hidden profit center.
Frequently Asked Questions
As of 2024, the average monthly car payment in the United States is approximately $735 for new vehicles and $523 for used vehicles, according to Experian's State of the Automotive Finance Market report. The average new car loan amount is around $40,000 with a term of 68 months.
Always get pre-approved from your bank or credit union first. Dealership financing is convenient but often includes a markup of 1-3% on the interest rate. However, manufacturers occasionally offer promotional rates (0%-2.9% APR) on new vehicles that banks cannot match. Compare both offers before deciding.
Most auto loans allow early payoff without prepayment penalties, but always check your loan agreement. Some lenders use precomputed interest (Rule of 78s), which front-loads interest and makes early payoff less beneficial. Simple interest loans are the most favorable for early repayment.
Financial experts recommend a minimum 20% down payment for new cars and 10% for used cars. A larger down payment reduces your loan-to-value ratio, lowers monthly payments, decreases total interest, and protects you from negative equity (being "upside down" on the loan).
In most US states, yes. When you trade in a vehicle, sales tax is calculated on the difference between the new car price and the trade-in value. For example, on a $35,000 car with a $10,000 trade-in, you pay tax on $25,000 instead of $35,000, saving you $700 at a 7% tax rate. However, a few states (like California) do not offer this trade-in tax credit.