Auto Loan Calculator
Estimate your auto loan's monthly payment and total interest. Enter the amount financed, interest rate, and term in months.
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $5,138 | $2,076 | $24,862 |
| 2 | $5,537 | $1,677 | $19,325 |
| 3 | $5,967 | $1,247 | $13,359 |
| 4 | $6,430 | $784 | $6,929 |
| 5 | $6,929 | $285 | $0 |
Assumes a fixed rate and equal monthly payments. Excludes fees unless included in the rate.
How to use this calculator
Enter the amount financed — which is the vehicle price plus applicable sales tax, minus your down payment and the value of any trade-in. Then enter the interest rate (APR) and the loan term in months. The calculator shows:
- Your fixed monthly payment
- Total interest paid over the life of the loan
- Total amount repaid (principal + interest)
- A year-by-year breakdown of balance, interest, and principal
If you'd rather start from the vehicle's sticker price and work through tax, down payment, and trade-in, use our car payment calculator, which builds the financed amount for you.
How auto loans work
An auto loan is a fixed-rate, fully amortizing installment loan. The lender sets a level monthly payment at origination, and each payment covers that month's interest on the outstanding balance plus a portion of the principal. As the balance falls each month, the interest portion shrinks and the principal portion grows — even though the payment itself never changes.
Your interest rate (APR) is determined by your credit score, the loan term, whether the vehicle is new or used, and the lender's own underwriting criteria. Borrowers with stronger credit scores typically qualify for lower rates, which meaningfully reduces the total cost of the loan.
One important distinction with auto loans is depreciation. A new car can lose a significant portion of its value in the first year. If you finance a large share of the purchase price over a long term, you may owe more than the car is worth for a period — a situation known as being "underwater" or "upside-down" on the loan. A larger down payment reduces this risk.
The auto loan formula
M = P · [ r(1 + r)n ] / [ (1 + r)n − 1 ]
Where M = monthly payment, P = amount financed, r = monthly interest rate (APR ÷ 12), and n = number of monthly payments (term in months).
Worked example — step by step
You finance $30,000 at 7.5% APR over 60 months:
- Monthly rate: 7.5% ÷ 12 = 0.625%
- Monthly payment: approximately $601
- Total paid: $601 × 60 = approximately $36,060
- Total interest: approximately $6,060
On Payment 1: interest = $30,000 × 0.625% = $187.50. Principal paid = $601 − $187.50 = $413.50. New balance = $29,586.50. By month 60 the balance reaches zero.
Now consider the impact of term length. The same $30,000 at 7.5% over 72 months gives a lower monthly payment of about $516, but total interest rises to roughly $7,150 — about $1,090 more than the 60-month option. You also stay in debt 12 months longer, which is 12 more months during which the car continues to depreciate faster than you are paying it down.
How to interpret your results
Focus on total interest, not just the monthly payment. A longer term always lowers the monthly payment but increases total interest. Compare a few term options side by side to find the right balance between affordability and total cost.
The year-by-year breakdown shows your remaining balance at the end of each year. Compare that with the estimated market value of the vehicle to understand your equity position and whether you are at risk of being underwater.
Common mistakes to avoid
- Focusing only on the monthly payment. Dealers often negotiate around the monthly payment rather than the total price. A lower payment achieved by extending the term costs more overall. Always calculate total interest before agreeing to a loan.
- Skipping pre-approval. Walking into a dealership without a competing loan offer weakens your negotiating position. Get a rate from your bank or credit union first and use it as a benchmark.
- Adding extras to the loan. Extended warranties, GAP insurance, and accessories financed into the loan amount increase the balance and the interest you pay. Evaluate these separately and pay cash if you choose them.
- Overlooking GAP insurance on long loans. If you are financing a high percentage of a new car's price over 60+ months and the car is totaled early, regular insurance may not cover what you still owe. GAP insurance covers that difference — worth considering but not worth overfinancing to pay for.
- Ignoring the opportunity cost of a large down payment. A large down payment reduces interest costs, but tying up cash in a depreciating asset has an opportunity cost too. Use this calculator to see precisely how much interest you save with different down payment amounts, then decide what makes sense for your overall financial picture.
Estimates only. Actual payment, rate, and fees depend on your lender, credit profile, and state regulations. This is not a loan offer or financial advice.
How we calculate this
This calculator uses the standard fixed-rate amortization formula to compute a level monthly payment from the amount financed, annual interest rate, and term in months. Interest each period is the remaining balance multiplied by the monthly rate (APR ÷ 12); the remainder of the payment reduces principal. The process repeats until the balance reaches zero.
Sources
Frequently asked questions
How is an auto loan monthly payment calculated?
An auto loan is a fixed-rate amortizing loan. The lender calculates a level monthly payment using the amount financed, the APR, and the term. Each payment covers that month's interest on the remaining balance plus a portion of principal. As the balance falls, the interest portion shrinks and more goes to principal.
What is the difference between the vehicle price and the amount financed?
The vehicle price is the purchase price of the car. The amount financed is what you actually borrow: vehicle price plus sales tax and any fees, minus your down payment and trade-in value. This calculator lets you enter the amount financed directly; use our car payment calculator to build it from the sticker price.
What is a typical auto loan term?
Common terms are 36, 48, 60, and 72 months. Shorter terms produce higher monthly payments but much less total interest. Longer terms — 72 or 84 months — lower the monthly payment but cost significantly more in interest and extend the period during which you may owe more than the car is worth.
What does it mean to be 'underwater' on a car loan?
You are underwater (or upside-down) when you owe more on the loan than the car is currently worth. Cars depreciate quickly — often 15–25% in the first year. Long loan terms and small down payments increase the chance of being underwater. Gap insurance can protect you if the car is totaled while you're in this position.
Should I make a down payment?
Yes, when possible. A larger down payment reduces the amount financed, lowering both your monthly payment and total interest. It also shrinks the gap between what you owe and what the car is worth, reducing the risk of being underwater. Lenders sometimes require a minimum down payment for longer-term loans.
How do I get the best auto loan rate?
Shop rates before visiting a dealership. Credit unions and banks often offer competitive rates, especially for members with good credit. Your credit score, loan term, and whether the vehicle is new or used all affect the rate you receive. Getting pre-approved gives you a benchmark to compare against dealer financing offers.
Is dealer financing or a bank loan better?
It depends. Dealers sometimes offer promotional rates (including 0% on new cars) that banks cannot match. Other times, dealers mark up the rate above what you'd qualify for directly. Getting a bank or credit union pre-approval before negotiations gives you a clear fallback and negotiating leverage.
Does this calculator include sales tax and fees?
This calculator uses the amount financed as a direct input — it does not break out tax and fees separately. If you want to build the financed amount from a sticker price, down payment, trade-in, and tax rate, use our car payment calculator, which handles those components.