What Is an Auto Loan?
An auto loan helps you pay for a vehicle over time. You borrow money, then repay the principal plus interest through regular monthly payments. Your rate and loan term affect the total cost.
Calculators
Auto Loan Calculator
Use the Auto Loan Calculator to estimate your monthly car payment, total interest, and loan cost. Enter your price, down payment, rate, term, tax, and trade in value.Monthly Payment
$578.59
Loan Amount
$30,000
Sales Tax
$0
Total Interest
$4,715.4
Total Cost
$35,000
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5.9% APR5yr⌘KMenu
How can you use our Auto Loan Calculator?
Our Auto Loan Calculator estimates your monthly car payment and total loan cost. Enter your vehicle and loan details to see clear results before you finance a car.
Step 1
Enter Your Loan Details
Enter the vehicle price, down payment, and trade-in value.
Step 2
Add Loan Information
Enter the interest rate, term, and sales tax.
Step 3
View Your Results
Get your monthly payment, interest, and total cost instantly.
Step 4
Copy Your Result
Copy the calculated loan details for future use.
Step 1
Enter Your Loan Details
Enter the vehicle price, down payment, and trade-in value.
Step 2
Add Loan Information
Enter the interest rate, term, and sales tax.
Step 3
View Your Results
Get your monthly payment, interest, and total cost instantly.
Step 4
Copy Your Result
Copy the calculated loan details for future use.
How do you calculate Auto Loan manually?
You can calculate an auto loan by using the monthly payment formula. The formula uses the loan principal, monthly interest rate, and number of payments.
Formula
Monthly payment = $P × (r(1 + r)^n) ÷ ((1 + r)^n − 1)
$P is the principal, r is the monthly rate, and n is the payment count.
Step by step Guide
- Find the amount financed after the down payment and trade in.
- Divide the annual APR by 12.
- Enter the principal, rate, and payment count.
- Multiply the payment by the payment count.
- Subtract the principal to find interest.
Practical Example
A 5,000 down payment. At 6% APR for 60 months, you finance 483.32. Total interest is $3,999.20.
Auto loan costs include more than the monthly payment. Compare financing choices, fees, rebates, insurance, credit, and loan strategies before you buy a vehicle.
Dealership Financing vs. Direct Lending
Dealership financing comes through the dealer. Direct lending comes from a bank or credit union. Compare APR, loan terms, fees, and total interest before choosing your financing option.
Vehicle Rebates
A vehicle rebate can lower the purchase price or financing amount. Check whether a rebate saves more money than a low interest offer before choosing a financing deal.
Fees
Fees can raise the amount you pay for a car loan. Add common vehicle costs to get a clearer view of your total purchase cost and amount financed.
Sales Tax
Sales tax can increase the amount financed. Your tax rate often depends on where you buy or register the vehicle, so enter the correct local rate.
Document Fees
A document fee covers paperwork handled during a vehicle purchase. Check the fee before signing, then include it when estimating your total loan cost.
Title and Registration Fees
Title and registration fees cover required vehicle records and registration. Add these costs when you want a more complete estimate of your financed amount.
Advertising Fees
Some dealers charge advertising fees as part of the vehicle deal. Ask what the fee covers and include it when comparing the total vehicle price.
Destination Fee
A destination fee covers shipping a new vehicle from the manufacturer to the dealer. Check whether the listed vehicle price already includes this fee.
Insurance
Car insurance adds to your monthly vehicle cost. Include insurance in your budget even though it usually sits outside the auto loan payment.
Auto Loan Strategies
Good auto loan strategies can lower borrowing costs. Prepare your budget, improve your credit, compare offers, and choose a payment you can manage comfortably.
Preparation
Set your car budget before shopping. Compare the vehicle price, down payment, loan term, APR, taxes, and fees before you apply for financing.
Credit
Your credit score can affect the APR a lender offers. A stronger credit profile may help you qualify for a lower rate and lower total interest cost.
Cash Back vs. Low Interest
A cash back offer can reduce your purchase cost. A low interest offer can reduce financing costs. Compare the total dollars saved by each choice.
Early Payoff
Paying an auto loan early can reduce future interest. Check your loan agreement for any early payoff rules before making extra principal payments.
Buying a Car with Cash Instead
Paying cash removes the need for monthly loan payments and interest. It can also give you more control over your car budget and future cash flow.
Avoid Monthly Payments
Paying cash means you avoid a monthly auto loan payment. That can leave more room in your budget for fuel, insurance, repairs, and savings.
Avoid Interest
Cash buyers avoid auto loan interest because they do not borrow money. The savings depend on the rate and loan term you would otherwise choose.
Cash Purchase Flexibility
Cash can preserve future flexibility if you keep an emergency fund after buying the car. Do not use all your savings just to avoid an auto loan.
Avoid Car Overbuying
Paying cash can limit overbuying because you see the full price immediately. Set a firm budget and choose a vehicle that fits it.
Cash Purchase Discounts
Cash buyers may find discounts, but offers vary by dealer. Compare the final vehicle price with financed offers before making your choice.
Avoid Underwater Loan
Cash buyers avoid an underwater auto loan because they do not owe more than the vehicle value. Depreciation still affects the car's market value.
What is Trade-in Value?
Trade in value is the amount a dealer offers for your current vehicle. A trade in can reduce the amount you need to finance, especially after any loan balance.
Annual amortization schedule
Year | Interest | Principal | Ending Balance |
|---|---|---|---|
1 | $1,835.98 | $7,222.21 | $32,777.79 |
2 | $1,466.48 | $7,591.71 | $25,186.08 |
3 | $1,078.07 | $7,980.12 | $17,205.96 |
4 | $669.80 | $8,388.40 | $8,817.56 |
5 | $240.63 | $8,817.56 | $0.00 |
Factors that affect your auto loan
Several factors shape an auto loan. The principal, interest rate, loan term, vehicle condition, and amortization schedule affect your borrowing cost.
Principal amount
The principal is the amount you borrow after applying your down payment, trade in, rebates, taxes, and fees. A larger principal usually means higher payments.
Interest rate
The interest rate shows the cost of borrowing. A higher rate raises your monthly payment and increases the total interest paid over the loan term.
Loan term
The loan term tells you how long you repay the loan. Longer terms can lower monthly payments but often increase total interest.
Vehicle condition
New and used vehicles can have different financing rates. Vehicle age, value, and lender rules can affect the rate and loan terms you receive.
Amortization schedule
An amortization schedule shows how each payment splits between principal and interest. Early payments often include more interest than later payments.
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Frequently Asked Questions
These answers explain how the Auto Loan Calculator works, how payments and interest change, and how credit, down payments, terms, and cash purchases affect your decision.