Shopping for a new or used car? Use our car loan calculator to see what your monthly payment might look like—and how much interest you would pay over the life of the loan.

Key Takeaways

  • Many car buyers take out a loan to finance their purchase, either from the dealer or through a bank.
  • The loan payments will be based primarily on the price of the car, whether it is new or used, the down payment, the length of the loan, and your credit score.
  • Use the auto loan interest calculator before you head to the car lot so you'll be ready to find a car that fits your budget and negotiate the best deal.

Auto Loan Payment Calculator Results Explained

To use the car loan interest calculator, enter a few details about the loan, including:

  • Vehicle cost: The amount you want to borrow to buy the car. If you plan to make a down payment or trade-in, subtract that amount from the car's price to determine the loan amount.
  • Term: The amount of time you have to repay the loan. In general, the longer the term, the lower your monthly payment, but the higher the total interest paid will be. On the other hand, the shorter the term, the higher your monthly payment, and the lower the total interest paid will be.
  • New/Used: Whether the car you want to buy is new or used. If you don't know the interest rate, this can help determine the rate you'll get (interest rates tend to be higher for used cars).
  • Interest rate: The cost to borrow the money, expressed as a percentage of the loan.

After you enter the details, the auto loan payment and interest calculator automatically displays the results, including the dollar amounts for the following:

  • Total monthly payment: The amount you'll pay each month for the duration of the loan. Some of each monthly payment goes toward paying down the principal, and part applies to interest.
  • Total principal paid: The total amount of money you'll borrow to buy the car.
  • Total interest paid: The total amount of interest you'll have paid over the life of the loan. In general, the longer you take to repay the loan, the more interest you pay overall. Add together the total principal paid and total interest paid to see the total overall cost of the car.

Use the auto loan calculator before you head to the car lot so you'll be ready to find a car that fits your budget and negotiate the best deal.

How Is Interest Calculated on a Car Loan? 

An auto loan interest calculator shows the total amount of interest you'll pay over the life of a loan. If the calculator offers an amortization schedule, you can see how much interest you'll pay each month. With most car loans, part of each payment goes toward the principal (the amount you borrow), and part goes toward interest.

The interest you pay each month is based on the loan's then-current balance. So, in the early days of the loan, when the balance is higher, you pay more interest. As you pay down the balance over time, the interest portion of the monthly payments gets smaller.

You can use the car loan calculator to determine how much interest you owe, or you can do it yourself if you're up for a little math. Here's the standard formula to calculate your monthly car loan interest by hand:

Monthly interest = ( interest rate 12 ) × loan balance \text{Monthly interest}=\bigg(\frac{\text{interest rate}}{12}\bigg)\times\text{loan balance} Monthly interest=(12interest rate)×loan balance

Here's an example, based on a $30,000 balance with a 6% interest rate:

= ( 0.06 12 ) × $ 30 , 000 = 0.005 × $ 30 , 000 Monthly interest = $ 150 \begin{gathered}=\bigg(\frac{0.06}{12}\bigg)\times\$30,000\\=0.005\times\$30,000\\\text{Monthly interest}=\$150\end{gathered} =(120.06)×$30,000=0.005×$30,000Monthly interest=$150

To convert a percent to a decimal, divide the percent by 100 and remove the percent sign. For example, 6% becomes the decimal 0.06 (6 ÷ 100 = 0.06). 

What Is a Good APR for a Car Loan? 

Interest on an auto loan can significantly increase the total cost of the car. For example, the interest on a $30,000, 36-month loan at 6% is $2,856. The same loan ($30,000 at 6%) paid back over 72 months would cost $5,797 in interest.

Of course, even small changes in your rate impact how much total interest amount you pay overall. The total interest amount on a $30,000, 72-month loan at 5% is $4,787—a savings of more than $1,000 versus the same loan at 6%.

So it pays to shop around to find the best rate possible. While interest rates vary by lender, your rate depends on other factors, too, including:

  • Federal Reserve interest rates: When the Fed keeps interest rates low, you pay less to borrow money.
  • Your credit score: In general, the better your credit, the lower your interest rate will be.
  • Your debt-to-income ratio (DTI): Your DTI shows how much of your gross monthly income goes toward paying your monthly debts. The lower your DTI, the lower your interest rate will be. 
  • Loan type: Loans for used cars have higher rates than those for new cars (because used cars have a lower resale value).
  • The loan term: Longer loan terms usually have higher interest rates.

So what's a good APR for a car loan? The best way to answer that is to look at averages. Here are the average new and used car loan rates by credit score, according to Experian's Q2 2022 State of the Automotive Finance Market report:

Average New Car Loan Rates by Credit Score
Credit Score Tier Credit Score Range Average New Car Rate
Deep Subprime 300 - 500 13.42%
Subprime 501 - 600 10.79%
Near Prime 601 - 660 8.12%
Prime 661 - 780 5.82%
Super Prime 781 - 850 4.75%

In general, a "good" rate is one that's equal to or, ideally, less than the average for your credit score. Here's a look at what those averages would cost over the life of a five-year, $30,000 loan:

What $30,000 Loans Cost Over 5 Years
Credit Score Range Total Interest
300 - 500 $11,343.57
501 - 600 $8,948.11
601 - 660 $6,600.97
661 - 780 $4,648.59
781 - 850 $3,762.44

How Can I Calculate My Car Payment?

Our loan calculator shows how much a loan will cost you each month and how much interest you will pay overall. It can be helpful to use the calculator to try out different scenarios to find a loan that fits your monthly budget—and the amount of total interest you're willing to pay.

The best way to get a lower auto loan interest rate is to improve your credit score. If you have a low credit score, consider holding off on a car purchase (if possible) until you can improve your score.

To calculate your monthly car loan payment by hand, divide the total loan and interest amount by the loan term (the number of months you have to repay the loan). For example, the total interest on a $30,000, 60-month loan at 4% would be $3,150. So, your monthly payment would be $552.50 ($30,000 + $3,150 ÷ 60 = $552.50). 

If you took a three-month payment freeze on a loan due to a COVID-19-related financial hardship, your subsequent repayments could be slightly higher to compensate.

The longer you take to repay a loan, the more interest you'll pay overall—and you'll likely have a higher interest rate, as well. Make a down payment, if possible, and aim for the shortest loan term possible with a monthly payment you can still afford. And keep in mind that a car comes with expenses beyond the loan payment. Be sure you'll have money left over to pay for car insurance, gas, parking, maintenance, and the like. 

Is a 72-Month Car Loan a Good Idea?

Car loans often have variable interest rates, so in a rising rate environment, a shorter loan could be a better idea. While you may have slightly lower monthly payments than a 60-month loan, you will also end up paying more interest over the life of the loan. Because cars depreciate with time, a longer loan can also lead you to become "upside-down," where your car is worth less than the outstanding balance on the loan.

Can You Negotiate the APR for a Car Loan?

This will depend on who the lender is and how creditworthy you are. Car dealers that originate auto loans may have more leeway to work with the interest rate in order to get the deal done. Moreover, lenders are not usually required to offer you their best interest rate available, so negotiating could save you hundreds or thousands of dollars over the life of the loan.

Why Do Dealers Often Want You to Finance?

Car dealers make money from lending money to buyers, which is one reason they are interested in having you finance your car instead of paying cash. This can come in the form of interest paid on the loan as well as commissions or origination fees.

The Bottom Line

You can use an auto loan interest calculator to help you better understand how much you will pay in monthly payments in total interest for various interest rates on a certain size loans. These tools can also help you compare interest rates on the same loan, so you can clearly understand what you can save with a lower interest rate.