Car Loan Calculator

An auto loan is a fully-amortizing fixed-rate installment loan. The lender sets a monthly payment such that, if you pay exactly that amount on time every month for the full term, the balance reaches zero at the end. The math is deceptively straightforward: the monthly payment is the amount that makes the present value of your future payment stream equal to the amount you borrowed today, discounted at the monthly interest rate.

Every payment is split between interest and principal. In the early months of a loan, most of the payment goes to interest because the balance is largest. As principal comes down, the interest portion shrinks and the principal portion grows. On a 60-month 7% loan, month 1 might be 60% interest / 40% principal; by month 40 that ratio has flipped to 20% / 80%. This is why paying extra toward principal early has an outsized effect on total interest — every dollar of principal knocked off in month 1 stops accruing interest for the remaining 59 months.

Auto lenders are required by CFPB Regulation Z Appendix J to use this exact formula and disclose the resulting monthly payment on the Truth in Lending disclosure they hand you before you sign. The monthly-payment number this calculator returns should match that disclosure to within a rounding cent when you use the same inputs.

Auto-loan APRs vary more than most consumer-loan APRs because credit-risk pricing is aggressive and dealer financing carries markup discretion. Five factors dominate: credit score, loan-to-value ratio (LTV), loan term, whether the vehicle is new or used, and how you sourced the financing (bank, credit union, dealer, or manufacturer captive).

Credit score has the largest single effect. According to Experian's quarterly State of the Automotive Finance Market report, prime borrowers (FICO 661–780) pay roughly 6–8% on new-car loans while deep-subprime borrowers (300–500) pay 15–20% or more. That spread of 8–12 percentage points is bigger than the spread across mortgage products for the same borrowers, largely because auto loans are unsecured relative to the vehicle's rapid depreciation.

Loan-to-value (LTV) matters because the lender's downside is capped by the car's resale value. A 100% LTV loan (no down payment) prices 0.5–1.5 percentage points higher than a 70–80% LTV loan for the same borrower. That is why paying 20% down on a new car or 10% down on a used one is a standard finance-hygiene rule.

Term matters mostly through rate: 84-month loans price about 1–1.5 points higher than 60-month loans, and 60-month loans price about 0.5 points higher than 36-month loans, because the lender is exposed to more months of depreciation risk.

New vs used matters materially: used-car loans price roughly 1.5–2.5 percentage points higher than new-car loans of the same credit tier because used-car resale values are harder to price precisely and used cars fail warranty on average earlier.

The table below summarises typical 60-month auto-loan APRs by credit tier for early 2026, drawn from Experian quarterly data. Individual lender offers vary — a specific credit union or captive-financing promo can beat these by 1–2 points — but this is the ballpark to expect before you start shopping.

The loan term controls the monthly-payment vs total-interest tradeoff more than any other single lever. A shorter term means a higher monthly payment but far less interest paid over the life of the loan. Here is the tradeoff on a $30,000 loan at 7% APR, holding rate constant (in reality longer terms usually price about 1 point higher, which makes the tradeoff even worse for stretch terms).

The interest rate on your loan is the periodic rate applied to the outstanding balance. The APR (Annual Percentage Rate), by contrast, is the interest rate plus any lender-charged fees expressed as an annualized rate. In auto lending, the two are usually identical because dealer and bank auto loans typically have no origination fee. But when they diverge, the APR is the number you compare across lenders.

The Truth in Lending disclosure the lender hands you before signing includes both the interest rate and the APR, along with the total amount financed, the total finance charge (interest over the life of the loan), and the total-of-payments figure. Regulation Z Appendix J prescribes the exact algorithm used to compute the disclosed APR, so two lenders quoting the same APR are truly quoting the same all-in cost.

One common trick: a dealer may quote you a "great rate" of, say, 4.9% while quietly rolling a $1,500 dealer service fee or dealer-installed accessory into the amount financed. That fee is disclosed on the Truth in Lending sheet but is easy to miss. The APR on the disclosure will reflect the added cost of that fee — often taking the effective APR to 7% or higher — even though the quoted rate is still 4.9%. Always compare APRs from the disclosure, not "rates" from the sales conversation.

A widely-cited auto-finance hygiene rule is 20/10/4: put at least 20% down on a new car (10% on a used one), keep total monthly transportation costs under 10% of gross income, and finance for no longer than 48 months. It is stricter than what most Americans actually do — the average new-car loan is 68 months with 12% down — but the rule works because it eliminates the two failure modes that make auto loans dangerous.

Failure mode one is negative equity: the moment the loan balance exceeds the vehicle's market value, the borrower is trapped. A 20% down payment plus a 48-month term keeps the borrower above water within the first 6 months and above water for the remainder of the loan.

Failure mode two is life disruption. When a five-year-plus car loan meets an unexpected job change, medical event, or family move, the borrower cannot easily sell the vehicle without bringing cash to close. Keeping the term at 48 months limits exposure to this kind of shock. If the 48-month payment does not fit your budget at the vehicle you want, the honest answer is usually to buy a less expensive vehicle rather than stretch the term.

Most US states charge sales tax on the difference between the vehicle purchase price and any trade-in credit, effectively giving the buyer a tax break on the trade-in value. On a $35,000 new car with a $10,000 trade-in in a 7% sales-tax state, this rule saves the buyer $700 in tax. This calculator defaults to that "price minus trade-in" rule.

A handful of states charge sales tax on the full vehicle price regardless of trade-in credit. In those states the tax break does not apply and selling privately (which nets more anyway on the vehicle side) is even more attractive relative to trading in. The current list, based on state department-of-revenue publications, is:

Refinancing an auto loan makes sense when the new APR is at least 1–2 points below your current APR, you have more than 24 months remaining on the loan, you have positive equity (loan balance below car value), and the refi has zero or low closing costs. Auto refinancing (compare using the Auto Loan Refi Break-Even Calculator) typically has no closing costs at all — unlike mortgage refis — which makes the break-even calculation simpler: divide any prepayment penalty by the monthly savings to get the number of months you need to keep the new loan to come out ahead.

If your original loan is not underwater and has 30+ months remaining, dropping the rate from 8% to 6% on a $25,000 remaining balance saves roughly $27 per month and $800+ over the remaining term — a clear win that requires only a soft credit pull and a few dollars in title fees. If you have 12 or fewer months remaining, the total interest saved is usually too small to bother with. Our related Refinance Calculator and Auto Loan Refi Break-Even tools do the specific math.

Auto financing is one of the more predatory corners of consumer credit in the US, and the sales process is optimised to sell you finance products, not vehicles. Watch for four specific traps.

Rolling negative equity forward. If you owe more on your current car than it is worth and roll the gap into the new loan, you have compounded the underwater position: now you owe the new car's price plus the old car's deficit, on a longer term at a probably-higher rate. The dealer will present this as a solution ("we'll handle your old car"); it is actually a much worse position.

Extended warranties bundled into the financed amount. A $2,500 extended warranty added to a 72-month loan at 8% APR costs the borrower about $3,150 over the loan's life — 25% more than the sticker price. Extended warranties are often profitable products the dealer prefers to sell, and the terms usually exclude the specific failure modes most likely to occur. Buy them separately if you want one, and never finance one.

Dealer rate markup. When you get financing through the dealer, the dealer often marks up the lender's wholesale rate by 1–2 percentage points and keeps the difference. This is legal and disclosed only in the APR figure on the Truth in Lending sheet. The remedy is simple: get a pre-approval from your bank or credit union first, then let the dealer try to beat it on rate. If the dealer cannot beat your pre-approval, use the pre-approval.

84-month loans on used cars. Combining the longest term with the highest-depreciation vehicle class puts the borrower dramatically underwater for 5+ years. If the affordability math only works at 84 months, the vehicle is too expensive.

Credit unions consistently offer the lowest average auto-loan APRs in the US, typically 1.0–1.5 percentage points below banks and 1.5–2.5 points below dealer financing on comparable credit tiers. That is a real $1,000–2,000 saving on a $30,000 five-year loan.

The reason is structural: credit unions are member-owned nonprofits and return their margin to members through lower loan rates and higher deposit rates rather than to shareholders. Banks and dealers have shareholders, so they price for margin. Dealer financing has an additional layer of markup because the dealer captures a slice of the rate.

The workflow that beats every alternative: apply for pre-approval at your local credit union (or PenFed, Navy Federal, Alliant, or another national credit union you qualify for). Bring the pre-approval to the dealer as leverage. If the dealer can beat the credit-union APR outright — sometimes possible with a manufacturer 0% financing promo — take the dealer's offer. Otherwise use the credit-union financing. Never let the dealer see the financing decision as automatic; that is where the markup lives.