Car Loan Calculator
What this calculator does
This calculator computes the monthly payment, total interest paid, and total cost of an auto loan based on the vehicle price, down payment, loan term, and interest rate. It helps you understand the true cost of financing a car and compare different loan scenarios before you visit the dealership.
Buying a car is the second-largest purchase most people make after a home. The monthly payment is important, but focusing only on that number—as many dealerships encourage—can obscure the total cost. A longer loan term lowers the monthly payment but dramatically increases the total interest you pay. This calculator makes those trade-offs transparent.
Whether you are buying new or used, financing through a bank, credit union, or dealer, this tool helps you walk into negotiations with a clear understanding of what you can afford.
How to use it
- Enter the vehicle price (e.g. $32,000).
- Enter your down payment (e.g. $5,000) or trade-in value.
- Enter the loan term in months (e.g. 60 months / 5 years).
- Enter the annual interest rate (APR) (e.g. 6.5%).
- Review the monthly payment, total interest, and total cost (price + interest).
Formulas used
Loan amount = Vehicle price − Down payment Example: $32,000 − $5,000 = $27,000
Monthly payment (standard amortization): M = P × [r(1+r)^n] / [(1+r)^n − 1] where P = loan amount, r = monthly rate (APR / 12), n = number of months. Example: $27,000 at 6.5% for 60 months → r = 0.005417, M ≈ $528.27
Total paid = Monthly payment × Number of months Example: $528.27 × 60 = $31,696
Total interest = Total paid − Loan amount Example: $31,696 − $27,000 = $4,696
Examples
Example 1 — New car, good credit: Price = $35,000. Down payment = $7,000. Loan = $28,000 at 5.9% for 60 months. Monthly = $541. Total interest = $4,472. Total cost = $39,472.
Example 2 — Used car, shorter term: Price = $18,000. Down payment = $3,000. Loan = $15,000 at 7.5% for 48 months. Monthly = $363. Total interest = $2,408. Total cost = $20,408.
Example 3 — Same car, longer term (72 vs. 60 months): Loan = $28,000 at 5.9%. At 60 months: $541/month, $4,472 interest. At 72 months: $463/month, $5,345 interest. The longer term saves $78/month but costs $873 more in total interest.
Tips and common mistakes
- Shorter terms save money. A 48-month loan costs significantly less in total interest than a 72-month loan, even if the monthly payment is higher. Choose the shortest term you can comfortably afford.
- Get pre-approved before shopping. A pre-approval from your bank or credit union gives you a baseline rate to compare against dealer financing. Dealers may beat it, but you will negotiate from a position of strength.
- Don't focus only on monthly payment. Dealers can make any payment look affordable by stretching the term. Always compare total cost.
- Factor in sales tax and fees. Many states charge sales tax on vehicles (5–10% of the price), plus registration, title, and documentation fees. These may be rolled into the loan, increasing the financed amount.
- Consider total cost of ownership. Beyond the loan payment, budget for insurance, fuel, maintenance, and depreciation. A cheaper car with lower insurance and maintenance costs may be the better financial decision.
- Avoid negative equity. If you owe more than the car is worth (common with long loans and small down payments), trading in or selling becomes expensive. A 20% down payment helps avoid this.