Auto Loan Calculator
Enter your vehicle price, down payment, and trade-in value to see your exact monthly payment and the true total cost of buying the car on credit.
🚗 What is an Auto Loan Calculator?
An auto loan calculator computes your monthly car payment, total interest, and the true cost of buying a vehicle on credit. It factors in your vehicle price, down payment, trade-in equity, interest rate, and loan term to give you the complete financial picture before you visit a dealership or sign a financing agreement. Understanding these numbers in advance puts you in a much stronger negotiating position.
This calculator covers three common car-buying scenarios. First, you are buying a new or used car and want to know the monthly payment for a specific price and rate. Second, you are trading in your current vehicle and want to see how the trade-in equity reduces your financed amount and total interest. Third, you have two loan offers from different lenders and want to compare them side by side on monthly payment, total interest, and total cost. Each scenario requires a different set of inputs, all of which are covered by the two modes in this calculator.
A common misconception is that the monthly payment is the primary number to optimize. In reality, a lower monthly payment achieved by extending the loan term from 48 to 72 months often adds more than $2,000 in total interest on a typical loan. The true cost of the vehicle, which includes everything you spend from down payment through the last loan payment, is the more honest comparison metric. This calculator surfaces that number in the "True Vehicle Cost" result so you can compare it against what the car is actually worth.
The Loan Comparison mode is particularly useful when a dealer offers 0% or 1.9% financing in exchange for giving up a manufacturer cash rebate. By comparing the rebate scenario (lower price, higher rate from a bank) against the special financing scenario (full price, 0% or low rate), you can quickly see which saves more money in total. Use the calculator before any negotiation so the numbers are already clear in your mind.
📐 Formula
M = P × r × (1 + r)n ÷ [(1 + r)n − 1]
M = monthly payment
P = loan principal = Vehicle Price − Down Payment − Trade-In Value
r = monthly interest rate = Annual Rate ÷ 12 ÷ 100
n = total months = Loan Term in months
Total Interest = (M × n) − P
True Vehicle Cost = (M × n) + Down Payment + Trade-In Value
Example: $35,000 vehicle, $5,000 down, $0 trade-in, 6.5% rate, 60 months. P = $30,000. r = 6.5/12/100 = 0.005417. M = 30,000 × 0.005417 × (1.005417)60 / [(1.005417)60 − 1] = approximately $587/month. Total Interest = $587 × 60 − $30,000 = $5,220. True Vehicle Cost = $5,000 + $35,220 = $40,220.
📖 How to Use This Calculator
Steps
1
Enter vehicle and loan details - In Loan Payment mode, enter the vehicle price, your down payment, any trade-in value, the annual interest rate, and the loan term in months using the dropdown (12 to 84 months).
2
Review your true monthly cost - The calculator shows the financed loan amount, your monthly payment, total interest, total repaid on the loan, and the true total cost including your upfront cash and trade-in.
3
Assess interest as a percentage - The interest cost as a percentage of the vehicle price gives a quick quality check. Under 5% is excellent. 10 to 15% is typical for a 60-month loan. Over 20% suggests a long term or high rate worth reconsidering.
4
Compare two loan offers - Switch to Loan Comparison mode, enter the same loan amount for both options, set the rate and term for Loan A and Loan B, and see a side-by-side table showing which offer costs less in total and the monthly payment difference.
5
Try different down payment scenarios - Increase the down payment slider to see how each extra dollar reduces the loan amount and total interest. This quantifies the financial value of saving more before buying the car.
💡 Example Calculations
Example 1 - Standard New Car Purchase
$35,000 vehicle, $5,000 down, $0 trade-in, 6.5% rate, 60 months
1
Loan amount = $35,000 − $5,000 = $30,000. Monthly rate r = 6.5 / 12 / 100 = 0.005417. n = 60.
2
Monthly payment M = $30,000 × 0.005417 × (1.005417)60 / [(1.005417)60 − 1] = approximately $587.
3
Total interest = $587 × 60 − $30,000 = $5,220. True vehicle cost = $5,000 + $35,220 = $40,220. Interest is 14.9% of vehicle price.
Monthly Payment = $587 | True Vehicle Cost: $40,220
Try this example →Example 2 - With Trade-In, Shorter Term
$28,000 used car, $3,000 down, $7,000 trade-in, 8.0% rate, 48 months
1
Loan amount = $28,000 − $3,000 − $7,000 = $18,000. Monthly rate r = 8.0 / 12 / 100 = 0.006667. n = 48.
2
Monthly payment M = $18,000 × 0.006667 × (1.006667)48 / [(1.006667)48 − 1] = approximately $439.
3
Total interest = $439 × 48 − $18,000 = $3,072. True vehicle cost = $10,000 + $21,072 = $31,072. The trade-in and 48-month term saved roughly $4,000 in interest versus a 60-month loan at the same rate.
Monthly Payment = $439 | True Vehicle Cost: $31,072
Try this example →Example 3 - Loan Comparison: Bank vs Dealer
$30,000 loan, Bank at 6.5% for 60 months vs Dealer at 8.9% for 72 months
1
Bank (Loan A): $30,000 at 6.5% for 60 months. Monthly = $587. Total interest = $5,220. Total paid = $35,220.
2
Dealer (Loan B): $30,000 at 8.9% for 72 months. Monthly = $528. Total interest = $8,016. Total paid = $38,016.
3
The dealer offer has a lower monthly payment ($528 vs $587) but costs $2,796 more in total. The bank loan saves $2,796 over the full term despite a $59 higher monthly payment.
Bank saves $2,796 total despite $59/mo higher payment
Try this example →❓ Frequently Asked Questions
How do I calculate my monthly car loan payment?
The monthly car loan payment uses the EMI formula: M = P times r times (1+r)^n divided by ((1+r)^n minus 1), where P is the loan principal, r is the monthly rate (annual rate divided by 12), and n is the number of months. For a $30,000 loan at 6.5% over 60 months, the monthly payment is approximately $587. This calculator applies the formula instantly for any combination of inputs.
What is a good interest rate for a car loan in 2025?
Average new car loan rates in the US were approximately 6.5 to 8.5% in 2025 for borrowers with good credit. Used car loan rates were typically 1 to 3 percentage points higher. Borrowers with excellent credit scores above 720 qualify for the lowest available rates. Credit unions often offer rates 0.5 to 1.5 percentage points below bank rates. Manufacturer promotional rates such as 0% or 1.9% are available periodically but require top-tier credit.
Should I make a larger down payment on a car loan?
A larger down payment reduces the loan principal and saves interest on every dollar across the full term. The standard recommendation is 20% down for a new car and 10% for a used car. It also protects you from being upside-down (owing more than the car is worth) during the first two years when depreciation is steepest. Use the down payment slider to see exactly how each additional dollar affects your monthly payment and total interest.
Is it better to get a shorter or longer car loan term?
A shorter term costs much less in total interest but requires a higher monthly payment. On a $30,000 loan at 7%, a 36-month term costs about $3,288 in interest while a 72-month term costs about $6,792. The 72-month term lowers the monthly payment by $209 but adds $3,504 in interest. Most financial advisors recommend the shortest term that fits your budget, typically 48 to 60 months for most buyers.
How does a trade-in reduce my auto loan?
Your trade-in value is subtracted from the vehicle purchase price before calculating the loan, directly reducing your principal. A $7,000 trade-in on a $28,000 vehicle reduces the financed amount to $21,000 (minus your down payment). This saves interest on the full $7,000 for every month of the loan. Getting an independent appraisal from a third party before visiting the dealer ensures you receive fair market value for the trade.
What is the true cost of a vehicle when financing?
The true vehicle cost includes every dollar you spend acquiring the car: down payment, trade-in equity committed to the deal, and all loan payments (principal plus interest). A $35,000 car with $5,000 down and a $35,220 loan repayment (principal plus interest at 6.5% for 60 months) costs $40,220 in total. This figure, not the sticker price or the monthly payment, is the real cost to compare against the car's value.
How do I compare two car loan offers effectively?
Use the Loan Comparison mode. Enter the same loan amount for both offers, set the rate and term for Loan A and Loan B, and review the side-by-side table. Focus on total paid, not just monthly payment. A dealer offering 8.9% for 72 months may have a lower monthly payment than a bank at 6.5% for 60 months, but the dealer offer can cost $2,000 to $3,000 more in total interest, making the bank a better deal despite the higher payment.
Can I get a car loan with bad credit?
Yes. Most lenders offer auto loans to borrowers with poor credit, but the interest rate will be significantly higher, often 12 to 24% for subprime borrowers. At 18% on a $20,000 loan over 60 months, total interest is about $10,200 compared to $3,300 at 6.5%. If your credit score is below 620, consider waiting 6 to 12 months to improve it before financing, as even a 2 to 3 percentage point improvement saves thousands of dollars.
Should I pay off my car loan early?
Paying off a car loan early saves interest and frees up monthly cash flow. Most modern auto loans have no prepayment penalty, so any extra payment goes directly to principal. The total interest shown by this calculator tells you exactly what you would save by prepaying. If your loan rate is above 7% and you have no higher-rate debt, early payoff is an attractive guaranteed return. Pay off higher-rate debt such as credit cards at 20%+ first.
What monthly car payment can I afford?
Most financial guidelines recommend limiting your car payment to 10 to 15% of monthly take-home pay, with total auto costs (payment, insurance, fuel, maintenance) below 20%. On a $5,000 monthly take-home, that means a car payment between $500 and $750. Use the vehicle price and down payment sliders to find a combination that produces a monthly payment within your target budget without extending the term so far that total interest becomes excessive.
Is dealer financing or bank financing better for a car loan?
It depends on the specific offers. Always get pre-approved by your bank or credit union before visiting the dealership. Use your pre-approval rate as a benchmark. Dealers sometimes beat bank rates during promotional periods such as 0% or 1.9% specials, but manufacturer incentive rates often require you to forgo a cash rebate worth $500 to $3,000. Use the Loan Comparison mode to compare the rebate scenario against the special rate scenario and choose the one that saves more in total.
What is GAP insurance and do I need it?
GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on your loan and the actual cash value of the car if it is totaled or stolen. New cars depreciate 15 to 25% in the first year, so if you financed 90 to 100% of the vehicle price, your loan balance can exceed the car's insurance payout in years one and two. GAP insurance typically costs $20 to $40 per year added to your auto insurance and is usually worth it if your down payment was under 20%.