Auto Loan Calculator: Estimate Your Car Payment | LendEDU (2024)

More calculators: Refinance car loan calculator & boat loan calculator

Why Using a Car Loan Calculator Is Important

Buying a car can be an expensive endeavor, and most people can’t afford to pay cash outright. Luckily, consumers who need cars can obtain auto loans through car dealerships, banks,credit unions, and evenonline lenders.

Auto loans aresecured personal loans, with the car acting as collateral. This means if you fail to make payments, your lender can repossess the vehicle and sell it to make its money back. Because the loans are secured, the interest rate is often lower than what you’d find with other types of consumer debt, such as credit cards and personal loans.

Your interest rate will be affected by various factors, however, such as whether you’re buying a new or used car; if you have a trade-in; the amount of your down payment; your credit score and income; and the length of your repayment loan term. Comparison shopping among lenders is also important for finding the best deal — and an auto loan calculator can help by estimating your monthly payments and total costs of borrowing.

How to Find a Good Auto Lender

As you can see from the carloancalculator, the interest rate you pay plays a huge role in both your monthly payments and overall loan costs. That’s why it’s so important to find thebest auto loanavailable.

To find a good car loan, you shouldn’t wait until you get to the dealership and just accept whatever financing it offers. Instead, you should get quotes on your own from multiple lendersbeforeyou head there so you’ll know what you can afford — and what interest rates you really qualify for. This is also an opportunity to negotiate with the dealer for better terms on its own loan. If they’re unable to beat a competing offer, you can choose to go with a different lender.

Working on improving your credit score by paying down debt and making on-time payments can also help you to get the best possible auto loanrates. You should look for car loan lenders that can prequalify you without a hard credit inquiry, which can temporarily affect your credit score. Fortunately, many lenders realize this and allow you to check your rates and eligibility with a soft credit pull only.

Frequently Asked Questions

Here are answers to a few frequently asked questions about auto loans.

How much will my car payment be?

Monthly payments on car loans are based on multiple factors, so it can be difficult to estimate what you’ll pay each month until you know the price of the car you want to buy and your specific loan terms. However, by entering some basic information into the autoloancalculator above, you can get a pretty good idea of what might end up paying.

How does interest work on a car loan?

Interest on a car loan generally accrues every day based on the principal balance or amount you borrow. As you make loanpayments, part of your payment amount goes toward principal and part of it goes toward paying accrued interest.

The higher your interest rate, obviously, the more total interest you’ll pay — but the length of your loan also affects your car loan payment. If you choose a loan with a longer repayment term, you’ll have lower monthly payments because of the longer repayment timeline. If you opt for a loan with a shorter term, your monthly payments will be higher, but you’ll pay less interest over the life of your loan.

Say, for example, you borrow $20,000 (roughly the price of an average used vehicle) using a loan with a 5% interest rate and 48-month loan term. In that scenario, your monthly payments will be around $461. But if you take 60 months to repay your loan with the same interest rate, your monthly payment will be just $377 at the same interest rate for the same vehicle.

How does my credit score affect my auto loan?

Your credit score is a major factor in calculating your auto loan rate. A higher credit score means you present lower risk as a borrower and are more likely to be approved for a loan with a low interest rate. If your score is on the lower end, you’ll be assigned a higher rate or could even be denied for a car loan.

If your credit score improves, it may be possible for you torefinance your auto loan with a lower rate. Depending on where you’re at in your repayment term, this could save you money as you pay your remaining loan balance. You’ll likely get better terms when it’s time to buy your next car, too.

Can I get an auto loan with bad credit?

Bad credit auto loans are very common. In fact, there are lenders that specifically cater to borrowers with poor credit. Creditors can give bad credit auto loans to consumers with lower risk than bad credit personal loansbecause the car could just be repossessed if the borrower doesn’t pay.

Unfortunately, many auto loan lenders charge unreasonably high interest rates and tack on additional fees for bad credit loans. Make sure the interest rate on your loan is fair and that the monthly payments are affordable — or you risk losing the vehicle and further damaging your credit.

Bottom Line

An auto loan calculator can help you get a good idea of what your monthly car payment might be like based on the purchase price of the car you’re eyeing and total loan amount (which might be reduced if you’re bringing trade-in value to the table). By using an auto loan payment calculator before you head to the dealer, you’ll be in a stronger position to negotiate and walk away with a loan that works for you.

Auto Loan Calculator: Estimate Your Car Payment | LendEDU (2024)

FAQs

How to calculate what your car payment will be? ›

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).

How much would a $30,000 car payment be? ›

A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 6 year term will have a monthly payment of $483. In total, the loan will cost $34,787 with $4,787 in interest.

What is the formula for calculating the monthly car payment? ›

Car loan payment formula

Monthly payment = (loan amount) × (interest rate / 12) / (1 − (1 + (interest rate / 12)) ^ (-loan term)).

What would the payment be on a $25,000 car loan? ›

Rates and terms are subject to change without notice. Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.

What is the rule of thumb for calculating car payment? ›

Consider your monthly budget

As a general rule of thumb, many experts suggest following the 20/4/10 rule, which holds that you should set aside 20% of a car's purchase price for a downpayment, take 4 years to repay your car loan, and ensure that your monthly transportation costs don't exceed 10% of your monthly income.

How much is a $20,000 car loan for 5 years? ›

A $20,000 loan at 5% for 60 months (5 years) will cost you a total of $22,645.48, whereas the same loan at 3% will cost you $21,562.43. That's a savings of $1,083.05. That same wise shopper will look not only at the interest rate but also the length of the loan.

What happens if I pay an extra $100 a month on my car loan? ›

Your car payment won't go down if you pay extra, but you'll pay the loan off faster. Paying extra can also save you money on interest depending on how soon you pay the loan off and how high your interest rate is.

What is the monthly payment on a $20,000 car loan? ›

Payments would be around $377 per month. According to the results, it will take you 60 months, an interest rate of 5% of $2,645, to fully pay your $20,000 car loan. However, the monthly cost of a $20,000 car loan will depend on your repayment period and the annual percentage rate (APR).

What is the formula for financing payments? ›

To calculate interest-only loan payments, multiply the loan balance by the annual interest rate, and divide it by the number of payments in a year. For example, interest-only payments on a $50,000 loan with a 4% interest rate and a 10-year repayment term would be $166.67.

How much is a $30,000 car payment for 5 years? ›

Provided the down payment is $5,000, the interest rate is 10%, and the loan length is five years, the monthly payment will be $531.18/month. With a $1,000 down payment and an interest rate of 20% with a five year loan, your monthly payment will be $768.32/month.

How much do I pay each month for a car? ›

The average monthly car payment for new cars is $726. The average monthly car payment for used cars is $533. 39.20 percent of vehicles financed in the third quarter of 2023 were new vehicles. 60.80 percent of vehicles financed in the third quarter of 2023 were used vehicles.

What credit score is needed for a $25,000 car loan? ›

There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.

What is a good APR for a car? ›

What is a good APR for a car loan with my credit score and desired vehicle? If you have excellent credit (750 or higher), the average auto loan rates are 5.07% for a new car and 5.32% for a used car. If you have good credit (700-749), the average auto loan rates are 6.02% for a new car and 6.27% for a used car.

What is a good interest rate for a car for 72 months? ›

An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.

How much should my car payment be if I make $60000 a year? ›

How much should I spend on a car if I make $60,000? If your gross salary is $60,000, your take-home monthly pay is probably around $3,750, assuming about 25% of your pay goes toward taxes and other expenses. Based on the 10-15% calculation, you should spend no more than $562.50 on a monthly car payment.

How much is a 30 000 car payment for 60 months? ›

How much would a $30,000 car cost per month? This all depends on the sales tax, the down payment, the interest rate and the length of the loan. But just as a ballpark estimate, assuming $3,000 down, an interest rate of 5.8% and a 60-month loan, the monthly payment would be about $520.

How much is a 20k car loan a month? ›

For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.

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