Auto Loan Calculator
Calculate your monthly car payment, total interest, and true cost of ownership.
| Item | Amount |
|---|---|
| Vehicle Price | — |
| Sales Tax | — |
| Down Payment | — |
| Trade-in Value | — |
| Amount Financed | — |
| Total Interest Paid | — |
| Total Amount Paid | — |
How Auto Loans Work
An auto loan is a secured installment loan where the vehicle itself serves as collateral. You borrow a fixed amount from a lender — a bank, credit union, or dealership financing arm — and repay it in equal monthly installments over a set term, typically 24 to 84 months. Each payment covers the interest accrued on the remaining balance plus a portion of the principal.
The Monthly Payment Formula
Auto loan payments use the same amortization formula as mortgages:
M = P × [r(1+r)n] / [(1+r)n - 1]
Where M = monthly payment, P = loan principal (vehicle price minus down payment and trade-in, plus applicable sales tax), r = monthly interest rate (APR divided by 12), and n = loan term in months.
What Affects Your Auto Loan Rate
Several factors determine the APR a lender offers you:
- Credit score — the single biggest factor. Borrowers with 720+ scores qualify for the best rates. Scores below 620 face significantly higher rates, sometimes 3–4 times what prime borrowers pay.
- Loan term — longer terms typically carry higher rates because the lender's risk exposure extends further into the future.
- New vs. used — new cars almost always qualify for lower rates than used cars. Manufacturer financing specials (0% APR promotions) are only available on new vehicles.
- Down payment — a larger down payment reduces the loan-to-value ratio, which can help you secure a better rate.
- Lender type — credit unions typically offer the lowest auto loan rates, followed by community banks, then large national banks. Dealer financing is convenient but often carries a markup.
New vs. Used Car Loan Rates
New car loan rates are typically 1–2 percentage points lower than used car rates. On a $35,000 loan over 60 months, the difference between 5% and 7% APR is about $1,900 in total interest. For used vehicles, lenders also consider the car's age and mileage — loans on vehicles older than 5–7 years or with very high mileage may be declined or offered at higher rates.
The True Cost of a Longer Loan Term
The appeal of a 72 or 84-month loan is a lower monthly payment. However, the total interest cost rises dramatically. On a $30,000 loan at 7% APR: a 48-month term costs $3,361 in interest, while a 72-month term costs $5,095 — over 50% more in interest for the same loan amount. Additionally, a longer term means slower equity buildup, making you more likely to be "upside-down" (owing more than the car is worth) if you need to sell or trade in early.
When to Refinance Your Auto Loan
Refinancing replaces your current loan with a new one, ideally at a lower rate. The best time to refinance is within the first 12–24 months of your loan, before you have paid off most of the interest. If your credit score has improved significantly since you took out the original loan — for example, going from 620 to 720 — you could qualify for a dramatically lower rate. Many banks and credit unions offer auto refinancing with no origination fees, making it a low-cost option to pursue if rates or your credit profile have improved.
Tips for Getting the Best Rate
- Get pre-approved by your bank or credit union before visiting the dealership. This gives you a baseline rate and negotiating power.
- Shop multiple lenders — rates can vary by 2–3% for the same borrower profile.
- Improve your credit score before applying by paying down credit card balances and resolving any errors on your credit report.
- Make a larger down payment to reduce your loan-to-value ratio and demonstrate financial stability to lenders.
- Choose a shorter loan term if your budget allows — you will pay less in total interest and build equity faster.
- Be cautious of add-ons at the dealership (extended warranties, GAP insurance, paint protection). These are often rolled into the loan at high markups.