How to Use Auto Loan Calculator
- Vehicle Price: Enter the price of the car you plan to buy.
- Down Payment: Enter how much cash you plan to pay upfront.
- Interest Rate (APR): Enter the annual interest rate offered by your lender or dealer.
- Loan Term: Enter the length of the loan in months (for example, 60 for a 5-year loan).
- Your Monthly Payment updates instantly as you type. Total interest and total loan cost are shown right next to it.
- If you have a trade-in vehicle, sales tax, or additional fees, click "Add trade-in, tax or fees" to include them in the calculation.
- To see how your loan balance decreases over time, click "View year-by-year breakdown" for a simple payment schedule.
Note: This calculator provides an estimate only. Your actual interest rate, monthly payment, and total cost will depend on your credit approval, lender, and local taxes and fees.
Auto Loan Basics
What Is an Auto Loan?
An auto loan is money borrowed from a bank, credit union, or dealership to purchase a vehicle. The borrower repays the loan in fixed monthly installments over an agreed period, known as the loan term. Each payment covers part of the original amount borrowed (principal) and part of the cost of borrowing (interest).
Key Terms Explained
- Principal
- The total amount of money borrowed to buy the vehicle, after subtracting your down payment and trade-in value.
- Interest Rate (APR)
- The annual cost of borrowing money, expressed as a percentage. A lower APR means a lower total cost over the life of the loan.
- Loan Term
- The number of months you have to repay the loan. Common terms are 36, 48, 60, 72, and 84 months. Longer terms lower the monthly payment but usually increase total interest paid.
- Down Payment
- The amount of cash paid upfront toward the vehicle price. A larger down payment reduces the amount you need to finance and can lower your monthly payment.
- Trade-in Value
- The value your current vehicle is worth if traded in to the dealership. This amount is typically subtracted from the price of the new vehicle before calculating the loan.
- Monthly Payment
- The fixed amount paid each month toward the loan, made up of a principal portion and an interest portion. Early payments include more interest; later payments include more principal.
- Total Interest
- The total amount of interest paid over the entire loan term, on top of the amount borrowed.
- Amortization
- The process of gradually paying off a loan through regular monthly payments, with the balance decreasing over time until it reaches zero.
How Is the Monthly Payment Calculated?
Auto loans use a standard amortized loan formula. The amount financed (vehicle price minus down payment and trade-in, plus any tax or fees) is spread across the loan term at a fixed monthly interest rate, so that each payment stays the same while the mix of interest and principal shifts over time.
What Affects Your Monthly Payment?
- Vehicle price: A higher price increases the amount financed.
- Down payment: A larger down payment reduces the loan amount and monthly payment.
- Interest rate: A higher rate increases both the monthly payment and total interest paid. Your rate is largely determined by your credit score.
- Loan term: A longer term lowers the monthly payment but increases the total interest paid over the life of the loan.
- Trade-in and taxes/fees: These can either reduce or increase the amount financed, depending on your situation.
Tips for a Better Auto Loan
- Compare rates from more than one lender before visiting a dealership.
- Check your credit score beforehand — it's the biggest factor in the rate you're offered.
- A larger down payment reduces both your monthly payment and total interest.
- Choose the shortest loan term you can comfortably afford — it saves money on interest overall.
- Remember to budget for insurance, maintenance, and fuel in addition to the monthly payment.