Auto Loan Calculator — Estimate Monthly Payments & Total Interest
Free auto loan calculator estimates monthly payments, total interest, and amortization. Compare new vs used cars, down payment impacts, and current 2025 rates.
Auto Loan Calculator — Estimate Monthly Payments & Total Interest
Enter your details below to calculate
Current Market Rates (2025)
Average Used Car Rate: 11.54%
Average Loan Term: 68.9 months
Prime (661-780): 6.78% APR
Subprime (501-600): 13.38% APR
How to Use Auto Loan Calculator
Enter Vehicle Price & Down Payment
Input the vehicle's purchase price and your down payment amount. Aim for 20% down on new cars or 10% on used cars to avoid negative equity and get better rates.
Add Trade-in Details
Include your trade-in value and any amount still owed. Your trade-in equity (value minus owed) reduces the loan amount. Research your car's value on Kelley Blue Book or Edmunds.
Set Interest Rate & Loan Term
Enter the APR based on your credit score. In 2025, super-prime borrowers (781+) get 5.27%, while subprime (501-600) pay 13.38%. Choose 48-60 months for optimal total cost.
Include Taxes & Fees
Add your state's sales tax rate (0-7.25%) and any dealer fees. These are rolled into your loan unless paid upfront. Review the amortization schedule to see interest vs. principal.
Key Features
Calculates monthly payments with real-time 2025 interest rates
Compares new vs. used car financing scenarios instantly
Shows complete amortization schedule with principal/interest breakdown
Accounts for trade-ins, down payments, taxes, and fees
Exports results to PDF/CSV for loan applications
Mobile-optimized with 48px touch targets and 18px fonts
100% private - no data tracking or storage
Includes current market rates from Experian & Bankrate data
What Is an Auto Loan Calculator?
An auto loan calculator is a powerful financial tool that helps you estimate your monthly car payment and understand the total cost of financing a vehicle purchase. By inputting key details like vehicle price, down payment, interest rate, and loan term, you can instantly see how much you'll pay each month and over the life of your loan.
In 2025, with average new car prices exceeding $41,983 and interest rates ranging from 5.27% for super-prime borrowers to over 15% for subprime borrowers, understanding your auto financing options is more critical than ever. Our calculator helps you make informed decisions before stepping into a dealership.
Key Statistic: According to Experian's Q2 2025 data, the average monthly payment for a new car loan is $749, while used car loans average $529 per month. Over a typical 68-month term, interest costs can add $5,000-$8,000 to your vehicle's total cost.
How Auto Loan Calculations Work
Auto loans use simple interest amortization, meaning you pay interest only on the remaining principal balance. Each monthly payment contains both principal and interest components, with the interest portion decreasing over time as you pay down the loan.
P × [r(1+r)^n] / [(1+r)^n-1]
Where:
P = Principal loan amount
r = Monthly interest rate (APR ÷ 12)
n = Number of payments (loan term in months)
- •Principal: The amount you borrow after down payment and trade-in
- •Interest Rate: Annual Percentage Rate (APR) expressed as a percentage
- •Loan Term: Length of the loan, typically 36-84 months
- •Amortization: The process of spreading payments over time
Key Concepts and Definitions
APR (Annual Percentage Rate)
The total cost of borrowing including interest and fees, expressed as an annual percentage. APR is higher than the interest rate alone and provides a more accurate comparison between loans.
Loan-to-Value (LTV) Ratio
The percentage of the vehicle's value that you're financing. Lower LTV ratios (more down payment) typically result in better interest rates and lower monthly payments.
Negative Equity
When you owe more on your car loan than the vehicle is worth. This commonly happens with small down payments and long loan terms, especially in the first few years.
Prepayment Penalty
A fee some lenders charge if you pay off your loan early. Most auto loans don't have prepayment penalties, but always check your loan agreement before signing.
Debt-to-Income Ratio
The percentage of your monthly income that goes toward debt payments. Lenders typically want this below 36-43% for auto loan approval.
Captive Financing
Financing offered by the car manufacturer's own finance company (e.g., Ford Credit, Toyota Financial). Often provides promotional rates like 0% APR for qualified buyers.
Real-World Example: Sarah's Car Purchase
Sarah is buying a new SUV priced at $38,500. She has a trade-in worth $8,000 but still owes $2,000 on it. She's putting down $4,000 cash and qualifies for a 6.78% APR (prime credit tier) over 60 months. Her state sales tax is 7%.
Vehicle Price: $38,500
Trade-in Equity: $6,000 ($8,000 - $2,000 owed)
Down Payment: $4,000
Sales Tax (7%): $2,695
Total Loan Amount: $31,195
Monthly Payment: $616.42
Total Interest Paid: $5,790.20
Total Cost: $44,290.20
Interest as % of Principal: 18.6%
By using our calculator, Sarah discovered that increasing her down payment to $6,000 would reduce her monthly payment to $577.89 and save her $385 in interest over the life of the loan. She also compared a 48-month term, which increased her payment to $745.23 but saved $1,247 in total interest.
💡 Expert Tips from Marko Šinko
1. Get Pre-Approved Before Visiting Dealers: Walking into a dealership with a pre-approved loan gives you negotiating power and helps you avoid high-pressure financing tactics. Credit unions often offer rates 1-2% lower than banks.
2. Understand the 20/4/10 Rule: Financial experts recommend putting at least 20% down, financing for no more than 4 years (48 months), and keeping total car expenses under 10% of your gross monthly income.
3. Check for Prepayment Penalties: While rare, some subprime auto loans include prepayment penalties. Always read the fine print and ask specifically about early payoff options before signing.
4. Time Your Purchase Strategically: Shop for cars at the end of the month, quarter, or model year when dealers are motivated to meet sales quotas. Interest rates also tend to be lower in the first quarter.
⚠️ Common Mistakes to Avoid
Mistake 1: Focusing Only on Monthly Payment
Many buyers accept longer loan terms (72-84 months) to get a lower monthly payment, but this significantly increases total interest paid and puts you at risk of negative equity.
Mistake 2: Not Checking Credit First
Your credit score directly impacts your interest rate. A 100-point difference can mean thousands in extra interest. Check your credit report for errors before applying.
Mistake 3: Rolling Negative Equity into a New Loan
Trading in a car you owe more than it's worth and rolling the difference into your new loan creates a dangerous debt cycle. Wait until you have positive equity or pay the difference in cash.
Mistake 4: Skipping the Down Payment
Zero-down financing may seem attractive, but it immediately puts you in negative equity due to vehicle depreciation. Aim for at least 10-20% down to protect yourself.
🎯 When to Use Auto Loan Calculator
About the Author
Marko Hrvojević
Finance Expert, CPA with 12+ years in financial analysis and tax planning
Connect with MarkoFrequently Asked Questions
What is the average auto loan interest rate in 2025?
According to Experian's Q2 2025 data, the average auto loan rate is 6.80% for new cars and 11.54% for used cars. However, rates vary significantly by credit score: super-prime borrowers (781+) average 5.27%, while subprime borrowers (501-600) pay around 13.38%. Your actual rate depends on credit history, loan term, down payment, and lender type.
How much should I put down on a car purchase?
Financial experts recommend the 20/4/10 rule: put at least 20% down, finance for no more than 4 years (48 months), and keep total car expenses under 10% of gross monthly income. A 20% down payment on a $35,000 car ($7,000) helps you avoid negative equity, get better interest rates, and reduces your monthly payment by approximately $130 on a 60-month loan.
Should I choose a longer loan term to get lower monthly payments?
While 72-84 month loans offer lower monthly payments, they significantly increase total interest paid and your risk of negative equity. For example, on a $30,000 loan at 7% APR: a 48-month term costs $718/month with $4,474 total interest, while 72 months costs $511/month but $6,792 in interest—a $2,318 difference. Choose the shortest term you can comfortably afford.
How does my credit score affect my auto loan rate?
Your credit score is the primary factor in determining your auto loan rate. In 2025, a super-prime score (781-850) gets you 5.27% APR, while a deep subprime score (300-500) results in 15.97% APR or higher. On a $30,000 loan over 60 months, this difference means paying $5,290 in interest versus $12,840—a $7,550 penalty for poor credit. Check your credit report and improve your score before applying.
What is an amortization schedule and why does it matter?
An amortization schedule shows how each monthly payment is split between principal and interest over your loan term. Early payments are mostly interest (e.g., 70% interest, 30% principal), while later payments flip to mostly principal. This matters because it shows how slowly you build equity and why extra principal payments early in the loan save significant interest.
Can I refinance my auto loan to get a better rate?
Yes, auto loan refinancing can save you money if interest rates have dropped or your credit score has improved. For example, refinancing a $25,000 balance from 9% to 5% APR saves approximately $56/month and $2,688 over a 48-month term. Most lenders require at least 6-12 months of payment history, loan-to-value under 125%, and credit score improvement. Check for prepayment penalties first.
Should I finance through the dealer or get pre-approved elsewhere?
Get pre-approved from a credit union or bank before visiting dealers. This gives you a baseline rate to negotiate against and prevents dealer markups (often 1-2% added to the rate). Dealers can sometimes beat pre-approved rates with promotional financing (0% APR offers), but having pre-approval ensures you won't accept unfavorable terms under pressure.
What fees should I expect when financing a car?
Beyond the vehicle price, budget for: sales tax (0-7.25% depending on state), title and registration fees ($200-500), documentation fees ($150-500), destination charges ($1,000-1,500 for new cars), and possibly extended warranties or gap insurance. These can add $2,000-4,000 to your total cost. Our calculator includes these in the total loan amount for accurate payment estimates.
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