What is a good interest rate for a car loan?

Rates depend on your credit score, loan term, and whether the car is new or used. As of recent years, excellent credit can secure 3-5% for new cars and 4-7% for used. Rates above 10% suggest you should work on improving your credit first.

Should I choose a longer loan term for lower payments?

While a 72 or 84-month loan lowers monthly payments, you pay significantly more interest and risk owing more than the car is worth. Financial experts recommend 48-60 months maximum for a new car.

How much should I put down on a car?

A 20% down payment is ideal for new cars and 10% for used cars. A larger down payment reduces your monthly payment, total interest, and the risk of negative equity.

Should I finance through the dealer or my bank?

Get pre-approved by your bank or credit union first, then let the dealer try to beat that rate. Having a pre-approval gives you negotiating leverage and a benchmark to compare against dealer financing.

What is the total cost of owning a car?

Beyond the loan payment, factor in insurance, fuel, maintenance, registration, and depreciation. A car that costs $35,000 can easily cost $50,000-$60,000 over five years when all expenses are included.

Auto Loan Calculator

Find out exactly what your monthly car payment will be — before you sign anything.

Auto Loan Calculator

Calculate your car loan payments

Estimate monthly car payments

Vehicle Price ($)

Down Payment ($)

Annual Interest Rate (%)

Loan Term (months)

Formula

M = P[r(1+r)^n] / [(1+r)^n - 1]

What Is an Auto Loan Calculator?

An auto loan calculator is a financial tool that tells you how much you'll pay each month for a financed vehicle. Car financing works by breaking your total loan amount — the vehicle price minus any down payment — into equal monthly installments over a set term, with interest applied to the outstanding balance each month. Lenders quote this interest as an Annual Percentage Rate (APR), which the calculator converts to a monthly figure to compute your payment accurately.

Comparing loan offers before you buy can save you thousands of dollars over the life of the loan. A half-point difference in APR on a $30,000 loan over 60 months adds up to more than $400 in extra interest. By plugging different scenarios into this calculator — varying the down payment, the term length, or the APR — you can see the true cost of each option and negotiate from a position of knowledge rather than guesswork.

How to Use This Calculator

1Enter the vehicle price — the full purchase price before any down payment or trade-in.
2Enter your down payment — the cash amount (or trade-in value) you're putting toward the purchase upfront.
3Enter the annual interest rate (APR) and choose your loan term in months (e.g., 36, 48, 60, or 72 months).
4Click Calculate to instantly see your estimated monthly payment, total interest paid, and total cost of the loan.

The Auto Loan Formula

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where:
  M = Monthly payment
  P = Principal loan amount (vehicle price − down payment)
  r = Monthly interest rate (APR ÷ 12 ÷ 100)
  n = Total number of monthly payments (loan term in months)

For example, on a $20,000 loan at 6% APR for 60 months: r = 0.06 ÷ 12 = 0.005, n = 60. The formula gives M = $386.66 per month. Multiply by 60 to get $23,199.60 total repaid — meaning $3,199.60 in total interest over the life of the loan.

Worked Examples

Example 1 — $25,000 New Car, 5.9% APR, 60 Months

Vehicle price: $25,000. Down payment: $5,000. Loan amount: $20,000. APR: 5.9% → monthly rate r = 0.004917. Term: 60 months. Monthly payment ≈ $385.49. Total repaid: $23,129.40. Total interest: $3,129.40. This is a typical scenario for a mid-range new car financed through a dealership or bank.

Example 2 — $40,000 SUV, 4.5% APR, 72 Months

Vehicle price: $40,000. Down payment: $8,000. Loan amount: $32,000. APR: 4.5% → monthly rate r = 0.00375. Term: 72 months. Monthly payment ≈ $499.17. Total repaid: $35,940.24. Total interest: $3,940.24. Stretching to 72 months lowers the monthly payment compared to a 60-month term, but adds roughly $810 more in interest over the life of the loan.

Example 3 — $15,000 Used Car, 8.9% APR, 48 Months

Vehicle price: $15,000. Down payment: $2,000. Loan amount: $13,000. APR: 8.9% → monthly rate r = 0.007417. Term: 48 months. Monthly payment ≈ $323.84. Total repaid: $15,544.32. Total interest: $2,544.32. Used-car loans typically carry higher APRs than new-car loans. Even so, a larger down payment and shorter term keep total interest well under $3,000 here.

Frequently Asked Questions

What is APR and how is it different from the interest rate?▾

APR stands for Annual Percentage Rate. It represents the yearly cost of borrowing, including the stated interest rate plus any lender fees rolled into the loan. On a simple auto loan with no additional fees, APR and interest rate are often identical. When comparing offers from multiple lenders, always compare APRs — not just the advertised rate — because a loan with a slightly lower rate but higher fees may actually cost more in total.

How does a larger down payment affect my monthly payment?▾

A larger down payment directly reduces the principal you're borrowing, which lowers both your monthly payment and the total interest you'll pay. For instance, increasing a down payment from $2,000 to $5,000 on a $25,000 car at 6% APR over 60 months reduces the monthly payment by roughly $58 and saves you over $170 in interest. It also improves your loan-to-value ratio, which can help you qualify for better rates.

Are interest rates higher for used cars than for new cars?▾

Yes, typically. New-car loans usually carry lower APRs because new vehicles serve as stronger collateral — they have a known value and are covered by manufacturer warranty. Used-car loans often run 1% to 4% higher in APR depending on the vehicle's age, mileage, and whether you're financing through a dealer, bank, or credit union. Shopping your financing separately (getting pre-approved at your bank or credit union before visiting the dealership) often yields a better rate.

What is the difference between a 60-month and a 72-month loan term?▾

A 72-month (6-year) term spreads payments over more months, so each monthly payment is lower than it would be on a 60-month term. However, you pay interest for an extra 12 months, which means you pay more in total interest over the life of the loan — often $500 to $1,500 more depending on the loan amount and rate. There is also a greater risk of being 'underwater' (owing more than the car is worth) with a longer term, since vehicles depreciate quickly in the first few years.

Can I use my trade-in value as a down payment?▾

Yes. Trade-in value effectively acts as a down payment by reducing the purchase price of your new vehicle before financing. If your trade-in is worth $4,000 and you put an additional $1,000 in cash down, your combined down payment is $5,000. Enter that combined figure in the down payment field of the calculator. Keep in mind that dealers may offer below-market trade-in values; getting an independent appraisal from services like CarMax or KBB beforehand gives you a stronger negotiating position.