🚗 Auto Loan Calculator
📊 Results
Monthly Payment
$0.00
Total Interest Paid
$0.00
Total Loan Cost
$0.00
📈 Loan Payoff Chart
🗓️ Loan Breakdown & Amortization
| Month | Payment | Interest | Principal | Balance |
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Understanding Your Auto Loan
How the Monthly Payment is Calculated
This calculator uses the standard formula to determine your monthly auto loan payment (M):
Where:
- P = The principal loan amount (the total amount you're financing).
- r = Your monthly interest rate (your annual rate divided by 12).
- n = The total number of payments (loan term in months).
Our tool automates this complex calculation for you, factoring in sales tax, fees, and your down payment to determine the final principal amount.
Example Calculation
Let's walk through an example:
- Vehicle Price: $30,000
- Down Payment: $5,000
- Sales Tax: 7% ($2,100)
- Fees: $400
- Interest Rate: 6% per year
- Loan Term: 5 years (60 months)
First, we find the total amount to be financed (the principal):
($30,000 Price + $2,100 Tax + $400 Fees) - $5,000 Down Payment = $27,500 Principal
Next, using the formula, the monthly payment would be approximately $534.62. Over 60 months, you'd pay a total of $32,077.20, with $4,577.20 of that being interest.
Pros & Cons of Long-Term Auto Loans (6+ Years)
While a longer loan term can make a new car seem more affordable due to lower monthly payments, it's important to understand the trade-offs.
- Pros: The primary advantage is a lower, more manageable monthly payment, which can free up cash flow for other expenses.
- Cons: You will pay significantly more in total interest over the life of the loan. You also risk becoming "upside down" or having "negative equity," where you owe more on the loan than the car is worth, as vehicles depreciate quickly. This can be problematic if you need to sell or trade in the car early.
Frequently Asked Questions (FAQ)
How much car can I afford?
Financial experts often recommend the 20/4/10 rule: make a 20% down payment, finance the car for no more than 4 years, and keep your total monthly car expenses (including principal, interest, and insurance) under 10% of your gross monthly income. Use this calculator to test different scenarios to see what fits your budget.
What is a good interest rate for a car loan?
A 'good' interest rate depends heavily on your credit score, the loan term, whether the car is new or used, and current market conditions. As of late 2024/early 2025, typical rates can range from 4-7% for excellent credit (760+) to 15-20% or higher for poor credit (below 600). It's always best to get pre-approved from multiple lenders, like a credit union and your bank, to compare offers.
Does a down payment lower my monthly car payment?
Yes, absolutely. A larger down payment reduces the total amount you need to finance (the principal). A smaller principal means you'll pay less in interest over the life of the loan and have a lower monthly payment. It also helps prevent you from being 'upside down' on your loan, where you owe more than the car is worth.
Should I include sales tax and fees in my auto loan?
While you can roll sales tax, title, registration, and other fees into your loan, it's financially wiser to pay for them upfront if possible. Financing these costs means you'll pay interest on them, increasing the total cost of your vehicle. This calculator allows you to see the impact of financing these additional costs.
What is amortization?
Amortization is the process of paying off a loan with regular, fixed payments over a set period. In the beginning of an auto loan, a larger portion of your monthly payment goes toward interest. As time goes on, more of your payment is applied to the principal (the amount you borrowed). Our amortization schedule shows this breakdown for every payment you make.
