Auto Loan Calculator

1. Enter the total vehicle price.
2. Set your down payment amount in dollars.
3. Enter the trade-in value of your current vehicle (if any).
4. Enter the annual interest rate (APR).
5. Select a loan term (36, 48, 60, 72, or 84 months).
6. View your monthly payment, loan amount, total cost, and total interest.
7. Expand the amortization schedule for a detailed month-by-month breakdown.

What Is an Auto Loan?

An auto loan is a secured installment loan used to finance the purchase of a vehicle. The vehicle itself serves as collateral, meaning the lender can repossess the car if the borrower fails to make payments. Auto loans are offered by banks, credit unions, online lenders, and dealership financing departments. They typically range from 36 to 84 months in length, with fixed interest rates that depend on your credit score, the loan term, and whether the vehicle is new or used. Understanding how auto loan payments are calculated helps you negotiate better terms, choose the right loan length, and budget accurately for your next vehicle purchase.

How Auto Loan Payments Are Calculated

The loan amount is first determined by subtracting your down payment and trade-in value from the vehicle price: Loan Amount = Vehicle Price - Down Payment - Trade-in Value. The monthly payment is then calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. Early in the loan, a larger portion of each payment covers interest. As the balance decreases, more of each payment goes toward principal. The amortization schedule in this calculator shows this shift in detail for every month.

Common Use Cases

• Estimating monthly payments before visiting a dealership
• Comparing the total cost of different loan terms (36, 48, 60, 72, or 84 months)
• Evaluating how a larger down payment or trade-in reduces your payment
• Determining whether you can afford a specific vehicle within your monthly budget
• Comparing financing offers from dealerships, banks, and credit unions
• Calculating total interest paid over the life of the loan

New Car vs. Used Car Financing

One of the biggest decisions when buying a car is whether to purchase new or used, and the financing implications are significant. New car loans typically carry lower interest rates (often 3% to 6% for borrowers with good credit) because lenders view newer vehicles as less risky collateral. Used car loans generally come with higher rates (5% to 10% or more) since the vehicle has already depreciated and carries greater risk for the lender. However, the lower purchase price of a used car often results in a smaller loan amount and lower total interest paid.

Depreciation is another critical factor. A new car typically loses 20% to 30% of its value in the first year alone, and roughly 60% over five years. This means a borrower who finances a new car with a long loan term (72 to 84 months) and a small down payment can quickly become "underwater," owing more than the vehicle is worth. Financial advisors generally recommend keeping auto loan terms at 60 months or less, putting at least 20% down on a new car (10% on used), and ensuring your total monthly vehicle costs (payment, insurance, fuel, maintenance) stay below 15% to 20% of your take-home pay.

Compare general loan terms with our Loan Calculator, explore home financing with the Mortgage Calculator, or plan your debt elimination strategy with the Debt Payoff Calculator.