Auto Loan Calculator
Free auto loan calculator. Enter the vehicle price, down payment, trade-in value, interest rate, and term to see your monthly payment and total loan cost.
Calculate your monthly car payment, total cost, and interest for any auto loan.
Buying a car is one of the most significant purchases most people make — second only to a home. Yet many buyers focus almost entirely on the monthly payment without understanding the true total cost of the loan. This auto loan calculator gives you the full picture: amount financed, monthly payment, total interest, and overall cost.
How an Auto Loan Works
An auto loan is a secured installment loan where the vehicle serves as collateral. The lender provides funds to purchase the vehicle; you repay the loan in fixed monthly installments over the agreed term. If you stop making payments, the lender can repossess the vehicle.
The monthly payment is calculated using the same standard annuity formula used for mortgages:
M = L × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where:
- L = Loan amount (vehicle price − down payment − trade-in value)
- r = Monthly interest rate (APR ÷ 12)
- n = Number of monthly payments (loan term in months)
The Three Factors That Determine Your Payment
1. Loan Amount: Vehicle price minus down payment minus trade-in value. This is the only amount on which you pay interest.
2. Interest Rate (APR): Auto loan rates vary significantly by credit score, lender type (bank, credit union, dealership financing), loan term, and whether the vehicle is new or used. Getting pre-approved from a bank or credit union before visiting the dealership gives you negotiating leverage.
3. Loan Term: Most auto loans run 36, 48, 60, 72, or 84 months. The term dramatically affects both your monthly payment and total interest.
Term Length Comparison: $25,000 at 6% APR
| Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 36 months | $760.55 | $1,379.80 | $26,379.80 |
| 48 months | $586.57 | $1,555.36 | $26,555.36 |
| 60 months | $483.32 | $3,999.20 | $28,999.20 |
| 72 months | $414.86 | $4,869.92 | $29,869.92 |
| 84 months | $364.44 | $5,612.96 | $30,612.96 |
The 84-month loan reduces the monthly payment by 4,233 more in total interest. More importantly, longer terms increase the risk of negative equity (being “underwater” on the loan).
Down Payment and Trade-In Value
Both a down payment and a trade-in reduce the amount you need to finance:
Amount financed = Vehicle price − Down payment − Trade-in value
Benefits of a larger down payment:
- Smaller loan = lower monthly payment and less total interest
- Reduces risk of going underwater on the loan (owing more than car is worth)
- May qualify you for better rates with some lenders
A trade-in is essentially a down payment in vehicle form. Dealers may offer below-market trade-in values — always check your car’s value on multiple sources (KBB, Edmunds, CarMax) before accepting a dealer’s offer.
New vs. Used Vehicle Financing
Used vehicles typically carry higher interest rates than new vehicles because they represent higher collateral risk (shorter remaining life, harder to value precisely). However, the lower purchase price of used vehicles often more than compensates for the higher rate.
What This Calculator Does Not Include
Your actual monthly vehicle cost is higher than the principal and interest payment:
- Sales tax: Typically 5–10% of vehicle price; often financed into the loan
- Registration and title fees: Vary by state/country
- Insurance: Required by lenders; comprehensive and collision coverage are mandatory for financed vehicles
- GAP insurance: Covers the difference between what you owe and what insurance pays if the car is totalled (particularly important with long loan terms)
- Extended warranty: If purchased, often added to loan amount
Frequently Asked Questions
Should I finance through the dealer or my own bank? Dealer financing can be convenient but is often more expensive. Dealerships earn profit on financing markups. Getting pre-approved from your bank or credit union first gives you a rate to compare against the dealer’s offer. Sometimes dealers offer promotional rates (0% financing) that beat independent lenders.
What is negative equity (being underwater)? Negative equity means you owe more on the loan than the vehicle is worth. Cars depreciate rapidly — a new car loses roughly 15–25% of its value in the first year. With a small down payment and long loan term, it can take 3+ years before you have positive equity. This becomes a problem if you want to sell, trade in, or if the car is totalled.
Is 0% financing actually free? Not always. Dealers offering 0% financing often offset it by not offering the cash rebate available to cash buyers. Compare the total cost with 0% financing versus taking the rebate and financing at a normal rate.
How does my credit score affect my rate? Credit scores heavily influence auto loan rates. A borrower with excellent credit (760+) may qualify for rates 3–5% lower than a borrower with fair credit (580–669). On a 2,000 in total interest.