🚗 Auto Loan Calculator
Calculate your monthly car payment, total interest, and see how down payment and loan term affect your costs.
Why Use This Calculator?
Accurate Calculations
Get precise Auto Loan Calculator auto loan calculator calculations based on current formulas and rates. Make informed financial decisions with reliable data.
Time-Saving Tool
Calculate complex scenarios in seconds instead of manually working through formulas. Focus on decision-making, not math.
Calculate True Auto Loan Total Cost
A $30,000 car at 7% for 5 years costs $35,644 total ($5,644 interest). At 5% it's only $33,968 ($3,968 interest). That 2% rate difference = $1,676 extra paid. Compare before signing dealer financing - shop at least 3 lenders.
Compare New vs Used Financing Costs
New car rates: 4-7%. Used car rates: 6-12% (higher because lender risk). $25,000 new at 5% = $472/month. $15,000 used at 9% = $311/month but total value lost to depreciation differs dramatically. Calculate total ownership cost.
Understand Down Payment Impact on Rate and Payment
20% down gets best rates and avoids being underwater (owing more than car worth). $30,000 car: $0 down at 8% = $608/month. $6,000 down at 6% = $464/month. Save $144/month AND $2,000+ in interest. Down payment is leverage.
Evaluate Dealer Financing vs Bank/Credit Union
Dealers markup buy rate 1-3% as profit. Dealer quotes 7%, they bought rate at 5%, keep 2% ($1,200 on $25,000 loan). Credit unions often 1-2% lower than dealers. Shop your own financing first, use dealer offer to negotiate better rate elsewhere.
Step-by-Step Guide
Determine Total Car Price Including All Costs
Don't just finance sticker price. Add taxes (6-10%), registration ($200-800), dealer fees ($300-800). $28,000 car + $2,240 tax + $500 fees = $30,740 financed. Plus gap insurance, extended warranty if included.
Example:
Example: $25,000 car + $1,875 tax (7.5%) + $600 registration/fees = $27,475 total to finance (if $0 down)
Decide Down Payment Amount (20% Recommended)
20% down avoids negative equity and gets better rates. $30,000 car = $6,000 down recommended. Less than 20% and you're underwater from day 1 (car worth less than you owe). More than 20% saves interest but ties up cash.
Example:
Example: $30,000 car with $3,000 down (10%) = $27,000 financed. Car depreciates to $24,000 year 1, you still owe $25,000 = $1,000 underwater. Can't sell/trade without cash.
Choose Loan Term (48-60 Months Recommended)
36-48 months = high payment, low interest, never underwater. 60 months = moderate. 72-84 months = low payment but high interest and underwater for years. Don't exceed useful life of car. Used cars should be 48 months max.
Example:
Example: $25,000 at 6% - 48 months = $587/month ($3,177 interest), 72 months = $414/month ($4,838 interest). $173/month savings costs $1,661 extra and underwater 4+ years.
Shop Multiple Lenders Before Visiting Dealer
Get pre-approved from bank and credit union before shopping cars. Know your rate/payment limit. Use this to negotiate dealer financing or take your pre-approval. Dealers can't markup pre-approved rates. All inquiries in 14 days = one credit pull.
Example:
Example: Credit union pre-approves $30,000 at 5.5%. Dealer quotes 7.5%. You counter: 'My credit union offered 5.5%, can you beat it?' Often dealer 'finds' 5.25% rate they didn't mention initially.
Calculate Affordability Using 10-15% Income Rule
Total car expenses (payment + insurance + gas + maintenance) shouldn't exceed 15% of gross income (10% better). $60,000 income = $9,000/year = $750/month max total car costs. If payment is $500, leaves $250 for insurance/gas/maintenance.
Example:
Example: $4,000/month income × 15% = $600 max total car costs. Payment $450, insurance $100, gas $80, maintenance $50 = $680 total. Over budget - need cheaper car or larger down payment.
Review Rate Ranges by Credit Score
Excellent credit (750+): 4-6%. Good (700-749): 6-8%. Fair (650-699): 8-12%. Poor (below 650): 12-18% or denial. Check your score first. Improving 50 points saves $1,500-3,000 on $25,000 loan - worth waiting.
Example:
Example: 680 score = 9% rate quote. Improve to 740 in 6 months = 6% rate. On $25,000 5-year loan: 9% = $519/month vs 6% = $483/month. Save $2,160 total by waiting.
Factor In Total Interest Paid Over Loan Life
Look beyond monthly payment. $30,000 at 7% for 72 months = $450/month but $7,379 interest paid. Same at 60 months = $594/month but $5,636 interest - pay $144 more/month, save $1,743 interest. Which is better financially?
Example:
Example: $25,000 at 8% - 60 months = $6,089 interest vs 72 months = $7,398 interest. That $1,309 extra interest costs only $86/month more. Choose shorter if affordable.
Compare New Car Incentives vs Used Rates
Manufacturers offer 0-3% financing on new cars to boost sales. $30,000 new at 2% vs $20,000 used at 8%. Calculate: new = $526/month ($1,553 interest), used = $405/month ($4,297 interest) BUT new loses $9,000 depreciation year 1.
Example:
Example: $28,000 new 0% 60 months = $467/month, worth $19,000 in 3 years. $19,000 used 7% 48 months = $455/month, worth $12,000 in 3 years. New: lose $9,000. Used: lose $7,000. Used wins $2,000.
Evaluate Gap Insurance Based on Down Payment
If less than 20% down, car worth less than owed (upside down). Totaled in accident, insurance pays car value, you owe more. Gap insurance covers difference. Costs $400-700. Essential if <10% down, not needed with 20%+ down.
Example:
Example: $30,000 car, $2,000 down, owe $28,000. Totaled 6 months later, worth $24,000. You owe $26,500 but insurance pays $24,000. You pay $2,500 gap OR gap insurance covers it.
Calculate Extra Payment Impact on Payoff
Small extra payments save significant interest and shorten term. $25,000 at 7% for 60 months = $495/month. Add $100 extra = saves $1,572 interest and pays off 10 months early. $50 extra saves $825 and finishes 5 months early.
Example:
Example: $30,000 at 6% - standard $580/month for 60 months = $4,799 interest. Add $100 extra ($680/month) = $3,633 interest, done in 48 months. Save $1,166 and finish 1 year early.
Expert Tips & Strategies
Never Finance More Than 100% of Car Value
Financing 110-120% (rolling negative equity from trade-in) puts you severely underwater. $25,000 car financed for $30,000 = you're $5,000 underwater immediately. If totaled, insurance pays $25,000 but you owe $30,000. Disaster scenario.
Put Down 20% to Avoid Being Underwater
Cars depreciate 20-30% first year, 15-20% per year after. 20% down keeps you above water entire loan. Can sell/trade anytime without bringing cash. Being underwater traps you in bad car situation.
Credit Unions Beat Banks and Dealers by 1-2%
Credit unions are non-profit, pass savings to members. Same borrower: dealer 8%, bank 7%, credit union 5.5%. On $25,000 loan, credit union saves $1,875 vs dealer. Joining credit union costs $5-25. Enormous ROI.
Don't Exceed 48 Months on Used Cars
Used cars have fewer remaining useful years. Financing 5-year-old car for 72 months means paying for 12-year-old car at end. Mechanical issues increase with age. Match loan term to realistic ownership period.
Negotiate Price Separately from Payment
Dealers focus on monthly payment: 'What payment works for you?' Then they adjust term/rate to hit that payment while charging more. Negotiate out-the-door price FIRST, then discuss financing separately. Don't let them combine.
Get Pre-Approved Before Shopping
Pre-approval gives you leverage and prevents dealer games. You know your rate/amount. Can focus on negotiating price instead of figuring out if financing is good. Also acts as backup if dealer financing falls through.
Refinance After 12 Months If Credit Improves
Got 9% rate with 660 score. Improve to 740 over first year. Refinance to 6% and save $1,500-2,500 rest of loan. Most lenders allow refinancing after 12 months. Check rate improvements annually.
Make Bi-Weekly Payments for Extra Payment Per Year
Pay half payment every 2 weeks instead of full payment monthly = 26 half-payments = 13 full payments per year (one extra). On $25,000 loan, saves $600-1,000 interest and finishes 6-10 months early.
Common Mistakes to Avoid
Focusing on Monthly Payment Instead of Total Cost
Dealer asks 'What monthly payment can you afford?' You say $400. They structure 84-month loan at marked-up rate to hit $400. You think you got deal but paying $7,000+ extra interest versus 60-month loan at better rate.
✓ Better approach: Negotiate out-the-door price first. Get price in writing. THEN discuss financing. Calculate total cost (principal + interest), not monthly payment. Ask: 'What is total amount I will repay?' Compare that number between options.
Accepting Dealer Financing Without Shopping
Dealer quotes 7.5% rate. Sounds okay, you sign. Later discover credit union would have given 5.5% for same profile. That 2% difference costs $2,400 on $30,000 5-year loan. 2 hours of shopping saves $1,200/hour.
✓ Better approach: ALWAYS get pre-approved from bank and credit union before visiting dealer. Use dealer offer to negotiate better rate at your bank. Or use your rate to negotiate dealer lower. Shop minimum 3 lenders every time.
Putting Less Than 10% Down
$30,000 car with $1,000 down (3%). You owe $29,000 immediately but car worth $24,000 after driving off lot. You're $5,000 underwater. Can't sell or trade without bringing $5,000 cash. Trapped.
✓ Better approach: Save 20% down payment minimum ($6,000 on $30,000 car) before buying. Keeps you above water entire loan, gets better rates (1-2% lower), lowers monthly payment significantly. Being underwater is financial prison.
Choosing 72-84 Month Terms for Lower Payment
$28,000 at 7% - 48 months = $671/month ($4,231 interest). 84 months = $424/month ($7,623 interest). Save $247/month but pay $3,392 MORE and underwater 5+ years. Car might need major repairs before loan paid off.
✓ Better approach: Maximum 60 months for new cars, 48 months for used. If you can't afford 60-month payment, you're buying too expensive car. Buy cheaper car with shorter term. You'll save thousands and avoid being trapped.
Rolling Negative Equity Into New Loan
Trade in car worth $15,000 but owe $20,000. Dealer rolls $5,000 into new $30,000 loan. Now financing $35,000 for $30,000 car. Instantly $5,000 underwater on new car. This spiral often repeats every few years.
✓ Better approach: If underwater, keep current car and pay it off. Don't compound the problem. Or bring $5,000 cash to trade. NEVER finance more than new car value. Break the cycle of perpetual negative equity.
Buying Based on Maximum Pre-Approval Amount
Pre-approved for $40,000 so you shop $40,000 cars. But $40,000 at 6% = $773/month. Plus insurance $180, gas $120 = $1,073/month total. On $5,000/month income, that's 21% = financial stress.
✓ Better approach: Pre-approval shows max, not recommended. Follow 10-15% gross income rule for ALL car expenses. $60,000 income = $750/month max total. If payment $500, leaves $250 for insurance/gas/maintenance. Shop accordingly.
Not Reading Financing Contract Before Signing
You negotiated $25,000 car, agreed to $500/month payment. Contract shows $28,500 financed (added $3,500 extended warranty and extras you didn't want). Sign without reading = stuck with $3,500 unwanted products.
✓ Better approach: Read EVERY line of financing contract. Verify: (1) Correct price, (2) Interest rate agreed, (3) Loan term, (4) NO unwanted add-ons. Ask about EVERY charge. Don't sign until you understand completely. Take your time.
Learn More
Complete Budgeting Guide
Master the 50/30/20 rule and other proven budgeting strategies to manage your money effectively.
📊Financial Planning Basics
Learn the fundamentals of financial planning, from emergency funds to retirement savings.
⭐Credit Score Improvement Guide
Boost your credit score to qualify for better rates and terms on all financial products.
Related Calculators
Frequently Asked Questions
What is a good interest rate for a car loan?
Excellent credit (720+): 4-6%, Good credit (680-719): 6-9%, Fair credit (640-679): 9-12%, Poor credit (<640): 12-18%. New cars typically have lower rates than used cars. Credit unions often offer better rates than dealerships.
How much should I put down on a car?
Aim for 20% down payment on new cars, 10% on used cars. This helps avoid being upside-down on your loan and reduces monthly payments and total interest. On a $35,000 car, that's $7,000 down.
What car loan term should I choose?
Shorter terms (36-48 months) have higher monthly payments but lower total interest. Longer terms (60-72 months) have lower monthly payments but cost more overall. Avoid 84+ month loans - you'll pay excessive interest and be upside-down longer.
Should I finance through the dealer or my bank?
Shop around! Get pre-approved from your bank/credit union first, then compare to dealer financing. Dealer rates are sometimes competitive, especially with manufacturer incentives (0% APR promotions). Credit unions typically offer the best rates.
How much car can I afford?
Total car expenses (payment, insurance, gas, maintenance) should not exceed 15-20% of your monthly income. If you make $5,000/month, spend no more than $750-$1,000 total on car expenses. Don't let the dealer talk you into "what payment you can afford."
Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.