Auto Loan Calculator
Your monthly car payment, total interest, and the true total cost — with down payment, trade-in value, and any APR or term.
Longer terms lower the payment but raise total interest — a 7-year loan can cost thousands more than a 4-year loan on the same car.
- Vehicle price$35,000.00
- Down payment−$5,000.00
- Trade-in value−$0.00
- Amount financed$30,000.00
- Total of 60 payments$35,642.16
- Total cost (price + interest)$40,642.16
Dealers often steer you to a longer term to hit a target monthly payment. Compare the total cost, not just the payment — and get pre-approved by your bank or credit union before you walk in, so you can take the better of the dealer's rate and yours.
How the math works
An auto loan is a fixed-rate installment loan: you borrow the amount financed and repay it in equal monthly payments covering both principal and interest, amortized so the balance hits exactly zero on the final payment. The payment formula is: monthly payment = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the amount financed, r is the monthly rate (annual APR ÷ 12), and n is the number of months.
Three inputs drive everything. The amount financed equals vehicle price minus down payment, trade-in value, and rebates — every dollar of down payment reduces the balance on which interest accrues. The APR sets the monthly rate: at 6.9% APR the monthly rate is about 0.575%, applied to the remaining balance each month. The term sets n: stretching from 60 to 84 months lowers the payment but adds two full years of interest charges.
The number that matters most is total interest = (monthly payment × number of payments) − amount financed. That is the true price of borrowing, and it is what you should compare across offers — not the monthly payment alone. Watch out for dealer add-ons like extended warranties or protection packages rolled into the loan: they silently increase P, and you pay interest on them for the entire term.
Worked example
Consider a $35,000 car with a $5,000 down payment, leaving $30,000 financed at 6.9% APR. Over 60 months the payment is $592.62 and total interest is $5,557. Stretch the term to 84 months and the payment drops to $451.32 — about $141 less per month — but total interest climbs to $7,910, which is $2,353 more for the convenience of the lower payment. There is a second cost: cars depreciate fastest in the first two years, so the 84-month borrower may owe more than the car is worth for much of the loan. The shorter term costs less overall and builds equity faster, provided the $592.62 payment fits the budget.
What to watch for
- Get pre-approved by your bank or credit union before visiting the dealer. A competing rate turns dealer financing into a contest — and you can still accept the dealer's offer if it beats yours.
- Negotiate the vehicle price and the financing as separate deals. Settle the out-the-door price first; a dealer can offset a "great rate" with a higher price if you bundle the negotiation.
- Question every add-on rolled into the loan. Extended warranties, paint protection, and similar extras increase the amount financed — ask for the payment with and without each one.
- With a small down payment, ask about GAP insurance. It covers the difference between your loan balance and the car's actual value if the vehicle is totaled while you are upside down — many insurers sell it far cheaper than dealerships.
- Compare total cost, not monthly payment. A lower payment stretched over two extra years usually costs thousands more in interest — always line up the total interest figures side by side.
Frequently asked questions
How is a car loan payment calculated?
Auto loans use standard amortization: the payment is set so the loan (vehicle price minus down payment and trade-in) plus interest is paid off evenly over the term. Higher APRs and longer terms both raise the total interest you pay.
Is a longer auto loan term better?
A longer term (72 or 84 months) lowers the monthly payment but usually costs thousands more in total interest — and you risk owing more than the car is worth (being 'upside down') as it depreciates. Shorter terms cost less overall if the payment fits your budget.
Should I get pre-approved before visiting the dealer?
Yes. A pre-approval from your bank or credit union gives you a rate to beat, which turns the dealer's financing offer into a competition instead of a take-it-or-leave-it number. You can still take the dealer's rate if it's lower.
Does a bigger down payment help?
It lowers the amount financed, which cuts both the monthly payment and total interest — and it protects you from owing more than the car is worth in the first couple of years when depreciation is steepest.
How does my credit score affect my auto loan rate?
Substantially. Borrowers with excellent credit often qualify for rates several percentage points below those with fair credit, which can mean thousands of dollars in interest on the same vehicle. Check your score before shopping — and know that multiple auto-loan inquiries within a 14–45 day window are generally treated as a single inquiry for scoring purposes.
Should I roll taxes and fees into the loan?
You can, but it increases the amount financed and therefore the interest you pay over the life of the loan. Paying sales tax, title, and documentation fees in cash keeps the loan smaller. Documentation fees vary widely — some states cap them, others do not — so ask what yours are before agreeing.
Is 0% dealer financing really free money?
The financing is free, but the price might not be: zero-percent offers usually require giving up a cash rebate, and they are typically reserved for top-tier credit on select models. Run both scenarios — rebate plus your own financing versus 0% at full price — and compare total cost.
What is GAP insurance and do I need it?
Guaranteed Asset Protection covers the gap between your loan balance and the car's actual cash value if it is totaled or stolen. It matters most with small down payments and long terms, when you are likely to owe more than the car is worth. Lenders and auto insurers usually sell it for far less than the dealership charges.