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.
Auto Loan Payment Calculator Results Explained
To use the car loan 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 more interest you will pay overall. On the other hand, the shorter the term, the higher your monthly payment, and the less interest you will pay.
- 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 calculator automatically displays the results, including the dollar amounts for the:
- 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 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=(12interest rate)×loan balance
Here's an example, based on a $30,000 balance with a 6% interest rate:
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 interest you pay overall. The interest 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 2020 State of the Automotive Finance Market report (the most recent data available):
|Average New and Used Car Loan Rates by Credit Score|
|Credit Score Tier||Credit Score Range||Average New Car Rate||Average Used Car Rate|
|Deep Subprime||300 - 500||13.97%||20.67%|
|Subprime||501 - 600||11.33%||17.78%|
|Nonprime||601 - 660||7.14%||11.41%|
|Prime||661 - 780||4.21%||6.05%|
|Super Prime||781 - 850||3.24%||4.08%|
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||Average New Car Rate||Total Interest||Average Used Car Rate||Total Interest|
|300 - 500||13.97%||$11,855||20.67%||$18,363|
|501 - 600||11.33%||$9,433||17.78%||$15,493|
|601 - 660||7.14%||$5,761||11.41%||$9,505|
|661 - 780||4.21%||$3,321||6.05%||$4,841|
|781 - 850||3.24%||$2,536||4.08%||$3,215|
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. —Jean Folger
Experian. "Finance Market Report Q2 2020." Pages 3, 22, 34. Accessed Oct. 28, 2020.
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