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Car Loan Calculator

Verified 2026-04-30 Report an error

$
$
$
%
mo
Amount financed
$30,000.00
Monthly payment
$594.04
Total of payments
$35,642.16
Total interest
$5,642.16
On this page
  1. Overview
  2. Key takeaway
  3. How it's calculated
  4. Quick tricks
  5. Examples
  6. FAQ
  7. Related calculators

A car loan calculator estimates the monthly payment, total interest, and lifetime cost of an auto loan. Enter the vehicle price, your down payment and trade-in value, the annual rate, and the term in months, the calculator returns what you'll owe each month and what the loan will cost in total.

Useful for comparing loan terms (36 vs. 60 vs. 72 months), evaluating dealer financing offers, deciding how much to put down, and budgeting around an auto purchase. The math here is principal-and-interest only; sales tax, registration, and dealer fees aren't included.

Key takeaway

The single biggest lever in a car loan is the term length. Stretching a $30K loan from 48 to 84 months drops the monthly payment by ~30% but increases total interest by 75-100%. American auto loans have drifted longer over the past decade, 72 and 84 months are now common, and the resulting "underwater" risk (owing more than the car is worth) has grown along with them.

How it's calculated

Same math as a standard amortizing loan:

M = P × r(1+r)^n / ((1+r)^n − 1)

where P = price − down_payment − trade_in, r = monthly rate (annual ÷ 12), and n = term in months.

Auto loans differ from mortgages in a few practical ways: they almost always use simple-interest accrual (interest charged daily on the outstanding balance, not compounded, extra payments toward principal immediately reduce future interest), they rarely have prepayment penalties (a few do, read your contract), and they carry steeper early-payoff math because the car depreciates faster than the loan pays down for the first 1-3 years. The "upside-down" period is when selling or trading the car requires bringing cash to close out the note.

Source: Standard amortizing-loan payment formula (auto-loan variant)

Examples

  1. $35,000 car, $5,000 down, 7% APR, 60 months

    • Vehicle price $35,000
    • Down payment $5,000
    • Trade-in value $0
    • Annual rate 7%
    • Loan term 60 mo

    Financing $30,000 at 7% over 5 years gives a $594 monthly payment and adds $5,642 in total interest. Standard scenario for a typical new-car purchase. Stretching the term to 72 months would drop the payment to ~$511 but raise total interest to ~$6,810, $1,200 more in interest for a $83 monthly relief.

  2. $22,000 used car, $3,000 trade-in, 6.5% APR, 48 months

    • Vehicle price $22,000
    • Down payment $0
    • Trade-in value $3,000
    • Annual rate 6.5%
    • Loan term 48 mo

    $19,000 financed (after a $3K trade-in) at 6.5% over 4 years gives a $450 monthly payment with $2,602 in total interest. Reasonable used-car loan terms, shorter than a typical new-car loan because the lender wants to outpace depreciation.

Frequently asked questions

How is a car loan calculated?

Using the standard amortizing-loan formula: M = P × r(1+r)^n / ((1+r)^n − 1), where P is the principal financed, r is the monthly rate, and n is the term in months. Most US auto loans use simple-interest accrual, interest accrues daily on the remaining balance, so paying extra against principal immediately reduces future interest. Add sales tax, fees, and gap insurance separately to get the out-the-door cost.

Should I take a longer term to lower the monthly payment?

It depends on your priority. Shorter terms minimize total cost but require larger monthly payments. Longer terms lower the monthly bill but add significant interest and increase the time you'll be "upside-down" on the loan (owing more than the car's worth). 60 months is a common balance; 72 and 84 are more common now but increase risk. The 20/4/10 rule (20% down, 4-year max, 10% of monthly income) is a conservative benchmark.

Is dealer financing usually better than a bank loan?

Sometimes. Dealer financing can offer attractive promotional rates (0% APR specials, cash-back deals) but the math doesn't always favor the buyer once you account for forgone cash rebates. Get pre-approved at a credit union or bank first to set a baseline rate, then compare against the dealer's offer. Dealer "rate markups", where the dealer adds margin to the lender's actual rate, are a known practice that can be negotiated down.

Should I make a bigger down payment?

Generally yes, especially on new cars. A larger down payment reduces the financed amount, lowers total interest, shortens the upside-down period, and can sometimes unlock better rates. The old "20% down" target is harder to hit at modern car prices, but even 10-15% down meaningfully changes the math. Beware paying down so much that you have no liquid emergency fund left, the smart balance varies by personal cash position.

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