Skip to content Auto Loan Calculator
Estimate your monthly car payments and see how factors like loan amount, interest rate, and loan term affect your payments.
Amortization Schedule
About Auto Loan Calculator
An auto loan calculator helps you estimate your monthly car payment and understand the total cost of financing a vehicle. This valuable tool can assist you in making informed decisions when purchasing a car, comparing different loan offers, and planning your budget effectively.
How to Use the Auto Loan Calculator
- Vehicle Price: Enter the total price of the vehicle you wish to purchase.
- Down Payment: Input the amount you plan to pay upfront.
- Trade-In Value: If you're trading in an existing vehicle, enter its value here.
- Interest Rate: Enter the annual interest rate offered by your lender (in percentage).
- Loan Term: Select the length of your loan in years.
- Sales Tax: Input your local sales tax percentage, if applicable.
- Click "Calculate Auto Loan" to see your estimated monthly payments and other details.
Understanding Your Auto Loan Results
After calculating your auto loan, you'll see several important figures:
- Monthly Payment: The amount you'll pay each month for the duration of your loan.
- Total Loan Amount: The total amount you're borrowing, including taxes and fees, after subtracting your down payment and trade-in value.
- Total Interest Paid: The total amount of interest you'll pay over the life of the loan.
- Total Cost: The complete cost of the vehicle, including the down payment, all loan payments, and interest.
The Auto Loan Formula
Auto loan payments are calculated using this formula:
Monthly Payment = [P × r × (1 + r)n] ÷ [(1 + r)n - 1]
Where:
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate divided by 12)
- n = Total number of payments (loan term in years × 12)
Factors That Affect Your Auto Loan
1. Credit Score
Your credit score significantly impacts the interest rate you'll be offered. Borrowers with higher credit scores typically qualify for lower interest rates, resulting in less interest paid over the life of the loan.
2. Loan Term
While a longer loan term can reduce your monthly payment, it usually results in paying more total interest. A shorter loan term often means higher monthly payments but less interest overall.
3. Down Payment
A larger down payment reduces the amount you need to borrow, which can lower your monthly payments and reduce the total interest paid. It may also help you secure better loan terms.
4. New vs. Used Vehicle
Interest rates for used cars are typically higher than those for new cars. However, used cars generally depreciate less quickly than new ones, which can affect the overall value of your purchase.
Tips for Getting the Best Auto Loan
- Check and improve your credit score before applying for a loan
- Shop around and compare loan offers from multiple lenders
- Consider getting pre-approved before visiting the dealership
- Negotiate the purchase price of the vehicle before discussing financing
- Be wary of unnecessary add-ons and extended warranties
- Read the fine print and understand all terms and conditions before signing
Auto Loan vs. Leasing
When considering a vehicle, you may have the option to lease instead of taking out an auto loan. Leasing typically offers lower monthly payments but doesn't result in ownership. With an auto loan, you'll own the vehicle once the loan is paid off. Consider your long-term goals, driving habits, and financial situation when deciding between leasing and buying.