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🚗 Auto Loan Calculator

Calculate your monthly car payment, total interest paid, and the true cost of financing a vehicle. Supports trade-in value, down payment, and sales tax.

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How to Use the Auto Loan Calculator

Enter the vehicle price, your down payment, and trade-in value (if applicable) to set the loan amount. Add the sales tax rate for your state, the annual interest rate, and loan term (24–84 months). The calculator shows your monthly payment, total interest, and the full cost of ownership for the financed portion.

Understanding Car Loan Costs

Unlike mortgages, auto loans are simple-interest loans — interest accrues daily on the outstanding balance. The formula is the same amortization equation, but cars depreciate while homes typically appreciate, making the true cost of ownership a critical consideration.

Monthly Payment M = P × r(1+r)⊃n / [(1+r)⊃n − 1]
P = Loan amount (vehicle price + tax − down − trade-in) r = Monthly interest rate n = Loan term in months

A $30,000 car with $5,000 down at 6.5% for 60 months results in a $483/month payment and $3,975 in total interest. Stretching to 84 months drops the payment to $361 but increases total interest to $5,316 — you pay $1,341 more for the convenience of a lower monthly number.

New vs Used Car Loans

New car loans typically carry lower interest rates (often 4–7% for good credit) because the collateral is more predictable. Used car loans are usually 1–3% higher because used vehicles carry more risk for lenders. However, a used car's lower purchase price often means a smaller loan even at a higher rate — compare total cost, not just monthly payment.

When a Longer Loan Term Backfires

72- and 84-month loans are tempting because they minimize monthly payments. But two risks emerge: being underwater (owing more than the car is worth) and paying far more in interest. Most cars lose 15–25% of value in the first year and 50% within 5 years. A 7-year loan on a vehicle that's lost half its value by year 5 means you're still paying for something worth a fraction of what you owe. Aim for a loan term no longer than the expected remaining useful life.

Tips to Get the Best Auto Loan Rate

  • Get pre-approved at your bank or credit union first — dealer financing is convenient but usually more expensive.
  • Credit score of 720+ qualifies for the best advertised rates; below 660 expect substantially higher offers.
  • Put at least 10–20% down to stay above water and reduce interest.
  • Shop rates from 3+ lenders — credit unions often beat banks and dealers by 1–2%.
  • Negotiate the car price separately from financing — dealers often make more on financing than on the vehicle itself.

For general loan comparison, try our loan calculator. To model the full financial picture of a major purchase, see our investment calculator.

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Frequently Asked Questions

Common questions about what is a good... and more.

What is a good interest rate for a car loan?

In 2024, good auto loan rates for borrowers with excellent credit (720+) range from approximately 5–7% for new vehicles and 6–9% for used vehicles. Average rates across all credit tiers run 8–12%+. Credit unions typically offer the most competitive rates, followed by banks, then dealership financing. If you're offered a rate above 15%, it may be worth improving your credit score before purchasing, or considering a cheaper vehicle. Use this calculator to model exactly how much each rate difference costs you in total interest.

How long should my car loan term be?

The ideal car loan term is the shortest term whose monthly payment fits your budget — typically 36–48 months. Longer terms (60–84 months) lower monthly payments but increase total interest and put you at risk of being "underwater" — owing more than the car is worth. Given that average car depreciation is 15–25% in year one and 50%+ by year five, a 72 or 84-month loan on a new car almost guarantees you'll be underwater for several years. If you can't afford a 48-month payment, the car may be outside your budget.

Should I finance a car or pay cash?

If the loan rate is below your expected investment return (say, below 5–6%), financing and investing the cash you would have spent can come out ahead mathematically. If the rate is higher than what you'd earn, paying cash saves money. Practically, cash gives you more negotiating leverage, zero interest cost, and no debt. Financing preserves liquidity and lets you keep earning on invested capital. Many financial advisors suggest financing only if you can get a rate below 5% and have solid emergency savings — otherwise, save up and pay cash.

What is the 20/4/10 rule for car buying?

The 20/4/10 rule is a popular car-buying guideline: put at least 20% down, finance for no more than 4 years, and keep total vehicle costs (loan payment + insurance) under 10% of gross monthly income. Following this rule keeps you from being underwater, minimizes total interest, and ensures the car doesn't strain your budget. On a $50,000 income (≈$4,167/month), 10% = $417/month for all car costs combined. Use this calculator to find the home price that hits this target.

Does my trade-in affect my loan amount?

Yes — your trade-in value is applied before financing, reducing the amount you need to borrow. If your trade-in is worth $8,000 and you're buying a $28,000 car, your financed amount is $20,000 (before any down payment or taxes). If you still owe money on your trade-in ("negative equity"), the remaining balance is typically rolled into the new loan, increasing your principal. Try to avoid rolling negative equity — it adds to your loan immediately and compounds the interest cost. Enter your trade-in value above to see the exact impact on your payment.