Car Loan Calculator
Example 1
You are considering a $30,000 car loan at 4.5% APR for 72 months.
You can afford a $400 monthly payment and need to know if this fits your budget.
The dealer offers a $2,000 rebate if you finance through their bank at 5.2%.
Solution
Option 1: $30,000 at 4.5% for 72 months
M = $474.85 per month
Option 2 (rebate): $28,000 at 5.2% for 72 months
Answer
Option 2 with the rebate gives a lower monthly payment ($454 vs $475), saving you about $21 per month.
Source: Federal Reserve: Consumer Credit
Example 2
You are buying a $25,000 car with a $5,000 down payment and no trade-in.
The dealership offers a 5% APR for 60 months.
You want to calculate the monthly payment and total interest cost before signing.
Solution
Answer
Your monthly payment is $377.42, and total interest over 5 years is $2,645.48.
Source: Federal Reserve: Consumer Credit
Example 3
You want to refinance your existing $18,000 car loan at 7% APR with 24 months remaining.
A credit union offers 3.9% APR for a new 24-month loan with a $100 origination fee.
You want to know if refinancing saves you money overall.
Solution
Answer
Refinancing saves $507.04 net over the remaining 24 months, making it worthwhile.
Source: Federal Reserve: Consumer Credit
Example 4
A buyer finances $35,000 at 6.5% APR for 72 months with $3,000 down. What is the monthly payment and total interest?
Solution
Answer
Monthly payment: $537.92. Total interest: $6,730.08 over 6 years.
Source: Federal Reserve: Consumer Credit
Reviewed by Dr. Mian Sajawal Shah (PhD, Power Electronics)
Published:
Updated:
References
- [1]Consumer Financial Protection Bureau, Consumer Financial Protection Bureau - Auto Loans. https://www.consumerfinance.gov/consumer-tools/auto-loans/
- [2]Experian, Experian State of the Automotive Finance Market Q4 2025. https://www.experian.com/automotive/state-of-automotive-finance-market
- [3]Federal Trade Commission, Federal Trade Commission - Car Buying and Financing. https://www.ftc.gov/tips-advice/business-center/guidance/car-buying-and-financing
Glossary
- Principal – The original loan amount borrowed to purchase a vehicle, excluding interest and fees.
- Annual Percentage Rate (APR) – The yearly cost of borrowing expressed as a percentage, including interest and loan fees.
- Amortization – The gradual repayment of a loan through scheduled monthly payments covering both principal and interest.
- Loan Term – The duration over which a car loan is repaid, typically 36, 48, 60, or 72 months.
- Down Payment – The upfront cash amount paid toward the car purchase, reducing the loan principal.
- Trade-In Value – The amount a dealer credits you for your current vehicle when purchasing a new one.
- Monthly Payment – The fixed amount paid each month to satisfy the loan, calculated using the amortization formula.
- Total Interest – The cumulative interest paid over the entire loan term, representing the cost of borrowing.
- Simple Interest – Interest calculated only on the original principal, without compounding on unpaid interest.
- Prepayment Penalty – A fee charged by some lenders for paying off a loan earlier than the scheduled term.
How to Use?
- 1
Enter the car price and your down payment
Type the total purchase price of the car and the cash amount you plan to pay upfront. If you have a trade-in, enter its estimated value as offered by the dealer.
- 2
Enter the interest rate and loan term
Input the APR from your lender or pre-approval offer. Choose the loan term in months or years — common terms are 48, 60, 72, and 84 months.
- 3
Choose your currency
Select your preferred currency from the dropdown. All results display in the chosen currency with proper formatting.
- 4
Review the results
The calculator shows your loan amount, monthly payment, total amount paid, and total interest. The amortisation table breaks down every payment across the full loan term into interest and principal portions.
- 5
Enable Advanced Mode for realistic estimates (optional)
Toggle Advanced Mode to include sales tax, registration fees, documentation fees, and extended warranty costs in the financed amount. This gives you a more accurate picture of the total loan cost including all fees.
Frequently Asked Questions
A car loan is a secured installment loan where the vehicle serves as collateral. You borrow a fixed amount (principal) and repay it in equal monthly payments over a set term at a fixed interest rate. Each payment covers both interest and principal. The lender holds the vehicle’s title until the loan is fully paid. If you default, the lender can repossess the vehicle. Car loans typically have terms between 36 and 84 months, with rates determined by your credit score, the loan term, and whether the car is new or used.
Your credit score is the primary factor lenders use to set your interest rate. According to Experian data from Q4 2025, borrowers with super-prime credit (781–850) qualified for an average APR of 4.5% on new-car loans, while subprime borrowers (501–600) averaged 11.2%. On a $30,000 loan over 60 months, that 6.7% spread costs an extra $5,600 in interest. Checking your credit score before shopping and disputing any errors can save you thousands over the life of the loan.
A down payment of at least 20% is recommended to avoid being upside down on the loan, meaning you owe more than the car is worth. A 20% down payment on a $30,000 car is $6,000. A larger down payment reduces your monthly payment, lowers total interest, and improves your chances of loan approval. If you cannot afford 20%, aim for at least 10% to minimise negative equity risk in the first year of ownership.
A trade-in reduces the amount you need to finance by the value the dealer offers for your current vehicle. If your trade-in is worth $8,000 and you are buying a $30,000 car, your loan amount drops by $8,000 before considering your down payment. This lower principal reduces both your monthly payment and total interest. However, if you owe more on your trade-in than it is worth (negative equity), the difference is added to the new loan, which can put you upside down from day one.
A 48-month loan costs significantly less in total interest but has a higher monthly payment. On a $25,000 loan at 6%, the 48-month payment is $587 with $3,176 total interest. The 72-month payment drops to $414 but total interest rises to $4,808. Choose the 48-month term if you can afford the higher payment and want to minimise interest. Choose the 72-month term only if the lower payment is essential for your monthly budget and you accept the higher total cost.
The interest rate is the cost of borrowing the principal. The APR includes the interest rate plus any fees required to originate the loan. In auto lending, the APR and interest rate are often identical because most car loans do not have origination fees. However, dealer markup, credit insurance, or add-on products can raise the APR above the base interest rate. The Truth in Lending Act requires lenders to disclose the APR in writing before you sign, and it appears in the federal disclosure box on your contract.
Most car loans from banks and credit unions do not have prepayment penalties, meaning you can pay off the loan early without any extra fee. Paying off early saves you the remaining interest you would have paid over the full term. However, some subprime lenders charge a prepayment penalty of 1% to 2% of the remaining balance. Check your loan contract for a prepayment penalty clause before signing. If the loan has one, calculate whether early payoff still saves you money after the fee.
Negative equity occurs when you owe more on your car loan than the vehicle is worth. This happens when you put little or no money down, finance a long term, or the car depreciates faster than expected. Rolling negative equity into a new loan means financing both the new car and the old loan balance, which puts you even further underwater. To avoid negative equity, make a down payment of at least 20%, choose a term of 60 months or less, and consider buying a car that holds its value well.
Guaranteed Asset Protection (GAP) insurance covers the difference between your loan balance and the car’s actual cash value if the vehicle is totalled or stolen. You need GAP insurance if you put less than 20% down, financed a long term (72+ months), or rolled negative equity into the loan. Dealerships charge $500 to $800 for GAP coverage, but your auto insurance company may offer it for $20 to $40 per year as a policy add-on, which is almost always cheaper.
Dealer fees such as documentation fees, registration fees, and dealer preparation charges are added to the total amount you finance, increasing both your monthly payment and total interest. A $500 documentation fee added to a $25,000 loan at 6% for 60 months increases the monthly payment by roughly $10 and the total interest by about $100. The Advanced Mode in this calculator lets you include these fees so you can see their true impact on your loan.
When you buy, you finance the full purchase price and own the vehicle after the loan is paid. When you lease, you finance only the car’s depreciation over the lease term, plus fees and interest. Lease payments are typically lower than loan payments for the same vehicle, but you do not own the car at the end and you are subject to mileage limits and wear-and-tear charges. Buying is better if you plan to keep the car for more than three to four years. Leasing makes sense if you want a lower monthly payment and prefer driving a new car every few years.
Refinancing replaces your existing car loan with a new one at a lower interest rate, reducing your monthly payment and total interest. To refinance, check your credit score, shop for rates from credit unions and online lenders, and apply with a lender that offers auto refinancing. You typically need at least 600 credit score and positive equity in the vehicle to qualify. Refinancing works best when rates have dropped since your original loan or your credit score has improved. Use this calculator to compare your current payment against the proposed refinanced payment before switching.
Credit scoring models treat multiple auto loan inquiries within a 14- to 45-day window as a single inquiry, so rate shopping does not meaningfully hurt your score. The algorithms recognise that you are comparing offers rather than applying for many separate loans. This rate-shopping window applies only to auto, mortgage, and student loan inquiries. Submit all your applications within that window to minimise the credit score impact. Outside the window, each hard inquiry can lower your score by a few points.
Dealerships can mark up the buy rate from the lender by 0.5% to 2% as profit for the F&I department. This markup is negotiable. If you arrive with a pre-approved offer from a credit union or online lender, the F&I manager knows they must beat that rate or lose the financing business. Ask the dealer for the buy rate and the marked-up rate in writing, then negotiate the difference. A 1% reduction on a $25,000 loan over 60 months saves roughly $800 in total interest.
Lenders charge higher rates on used-car loans because the collateral is worth less and depreciates more unpredictably. New-car loans typically have rates 1.5% to 2.5% lower than used-car loans for the same borrower and term. Many lenders also impose age and mileage limits: the car must be no more than 7 to 10 years old with under 100,000 to 120,000 miles at the time of application. Some lenders will not finance very old or high-mileage vehicles at all, regardless of your credit score. Check with your lender about their specific age and mileage policies before shopping for a used car.
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