Auto Loan Payment and Interest Calculator (2024)

Shopping for a new or used car? Use our car loan calculator to see what your monthly payment might look like—and how much interest you would pay over the life of the loan.

Key Takeaways

  • Many car buyers take out a loan to finance their purchase from the dealer or through a bank.
  • Auto loan payments are based primarily on the price of the car, whether it is new or used, the down payment, the length of the loan, and your credit score.
  • Use the auto loan interest calculator before you head to the car lot so you'll be ready to find a car that fits your budget and negotiate the best deal.

Auto Loan Payment Calculator Results Explained

To use the car loan interest calculator, enter a few details about the loan, including:

  • Vehicle Cost: The amount you want to borrow to buy the car. If you plan to make a down payment or trade-in, subtract that amount from the car's price to determine the loan amount.
  • Term: The amount of time you have to repay the loan. The longer the term, the lower your monthly payment, but the higher the total interest paid will be. On the other hand, the shorter the term, the higher your monthly payment, and the lower the total interest paid will be.
  • New/Used: Whether the car you want to buy is new or used. If you don't know the interest rate, this can help determine the rate you'll get (interest rates tend to be higher for used cars).
  • Interest Rate: The cost to borrow the money, expressed as a percentage of the loan.

After you enter the details, the auto loan payment and interest calculator automatically displays the results,including the dollar amounts for the following:

  • Total Monthly Payment: The amount you'll pay each month for the duration of the loan. Some of each monthly payment goes toward paying down the principal, and part applies to interest.
  • Total Principal Paid: The total amount of money borrowed to buy the car.
  • Total Interest Paid: The total amount of interest paid over the life of the loan. The longer you take to repay the loan, the more interest you generally pay overall. Add together the total principal paid and total interest paid to see the total overall cost of the car.

See our picks for the best auto loans in a variety of categories:

  • Best Auto Loan Rates
  • Best Used Car Loans
  • Best Auto Refinance Loans
  • Best Car Loans for Bad Credit
  • Best Car Loans for Fair Credit
  • Best Car Loans for First Time Buyers

How Is Interest Calculated on a Car Loan?

An auto loan interest calculator shows the total amount of interest you can expect to pay over the life of a loan. If the calculator offers an amortization schedule, you can see how much interest you'll pay each month. With most car loans, part of each payment goes toward the principal (the amount you borrow), and part goes toward interest.

The interest you pay each month is based on the loan's then-current balance. So, in the early days of the loan, when the balance is higher, you pay more interest. As you pay down the balance over time, the interest portion of the monthly payments gets smaller.

You can use the car loan calculator to determine how much interest you owe, or you can do it yourself if you're up for a little math. Here's the standard formula to calculate your monthly car loan interest by hand:

Monthlyinterest=(interestrate12)×loanbalance\text{Monthly interest}=\bigg(\frac{\text{interest rate}}{12}\bigg)\times\text{loan balance}Monthlyinterest=(12interestrate)×loanbalance

Here's an example, based on a $30,000 balance with a 6% interest rate:

=(0.0612)×$30,000=0.005×$30,000Monthlyinterest=$150\begin{gathered}=\bigg(\frac{0.06}{12}\bigg)\times\$30,000\\=0.005\times\$30,000\\\text{Monthly interest}=\$150\end{gathered}=(120.06)×$30,000=0.005×$30,000Monthlyinterest=$150

To convert a percent to a decimal, divide the percent by 100 and remove the percent sign. For example, 6% becomes the decimal 0.06 (6 ÷ 100 = 0.06).

What Is a Good APR for a Car Loan?

Interest on an auto loan can significantly increase the total cost of the car. For example, the interest on a $30,000, 36-month loan at 6% is $2,856. The same loan ($30,000 at 6%) paid back over 72 months would cost $5,797 in interest.

Even small changes in your rate can impact how much total interest amount you pay overall. The total interest amount on a $30,000, 72-month loan at 5% is $4,787—a savings of more than $1,000 versus the same loan at 6%.

So it pays to shop around to find the best rate possible. While interest rates vary by lender, your rate depends on other factors, too, including:

Federal Reserve RatesWhen the Fed keeps interest rates low, you pay less to borrow money.
Your Credit ScoreCredit scores and rates typically have inverse relationships. So a higher credit score earns you a lower rate and vice versa.
Your Debt-to-Income (DTI) RatioThis highlights how much of your gross monthly income goes toward paying your monthly debts. A lower DTI usually earns you a lower rate and vice versa.
Loan TypeUsed car loans have higher rates than those for new cars. That's because used cars have a lower resale value.
Loan TermLonger loan terms generally have higher rates.

Use the auto loan calculator before you head to the car lot so you'll be ready to find a car that fits your budget and negotiate the best deal.

So what's a good APR for a car loan? The best way to answer that is to look at averages. Here are the average new and used car loan rates by credit score, according to Experian:

Average New Car Loan Rates by Credit Score
Credit Score TierCredit Score RangeAverage New Car Rate
Deep Subprime300 - 50014.08%
Subprime501 - 60011.53%
Near Prime601 - 6608.86%
Prime661 - 7806.40%
Super Prime781 - 8505.18%

A good rate is generally equal to or, ideally, less than the average for your credit score. Here's a look at what those averages would cost over the life of a five-year, $30,000 loan:

What $30,000 Loans Cost Over 5 Years
Credit Score RangeTotal Interest
300 - 500$11,957.54
501 - 600$9,613.81
601 - 660$7,242.85
661 - 780$5,134.82
781 - 850$4,116.86

How Can I Calculate My Car Payment?

Our loan calculator shows how much a loan will cost you each month and how much interest you will pay overall. It can be helpful to use the calculator to try out different scenarios to find a loan that fits your monthly budget—and the amount of total interest you're willing to pay.

The best way to get a lower auto loan interest rate is to improve your credit score. If you have a low credit score, consider holding off on a car purchase (if possible) until you can improve your score.

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). For example, the total interest on a $30,000, 60-month loan at 4% would be $3,150. So, your monthly payment would be $552.50 ($30,000 + $3,150 ÷ 60 = $552.50).

The longer you take to repay a loan, the more interest you'll pay overall—and you'll likely have a higher interest rate, as well. Make a down payment, if possible, and aim for the shortest loan term possible with a monthly payment you can still afford. And keep in mind that a car comes with expenses beyond the loan payment. Be sure you'll have money left over to pay for car insurance, gas, parking, maintenance, and the like.

Is a 72-Month Car Loan a Good Idea?

Car loans often have variable interest rates, so in a rising rate environment, a shorter loan could be a better idea. While you may have slightly lower monthly payments than a 60-month loan, you will also end up paying more interest over the life of the loan. Because cars depreciate with time, a longer loan can also lead you to become "upside-down," where your car is worth less than the outstanding balance on the loan.

Can You Negotiate the APR for a Car Loan?

This will depend on who the lender is and how creditworthy you are. Car dealers that originate auto loans may have more leeway to work with the interest rate to get the deal done. Lenders are not usually required to offer you their best interest rate available, so negotiating could save you hundreds or thousands of dollars over the life of the loan.

Why Do Dealers Often Want You to Finance?

Car dealers make money from lending money to buyers, which is one reason they are interested in having you finance your car instead of paying cash. This can come in the form of interest paid on the loan as well as commissions or origination fees.

The Bottom Line

You can use an auto loan interest calculator to help you better understand how much you will pay in monthly payments in total interest for various interest rates on a certain size loans. These tools can also help you compare interest rates on the same loan, so you can clearly understand what you can save with a lower interest rate.

Article Sources

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Part Of

How to Buy a Car

  • How to Buy a Car1 of 26
  • Pros and Cons of Leasing or Buying a Car2 of 26
  • Should You Lease to Buy a Car? Pros and Cons3 of 26
  • New Wheels: Lease or Buy?4 of 26
  • Should Retirees Buy or Lease Cars? 5 Things to Consider5 of 26
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  • Auto Loan Payment and Interest Calculator18 of 26
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  • Are Kelley Blue Book Values Accurate and Reliable?21 of 26
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  • How to Get the Best Price on a New Car24 of 26
  • Here's How to Get a Car With No Down Payment25 of 26
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Auto Loan Payment and Interest Calculator (2024)

FAQs

How to calculate interest and monthly payment on car loan? ›

Here is the calculation:
  1. Divide your interest rate by the number of monthly payments per year.
  2. Multiply the monthly payment by the balance of your loan. However, for the first payment, this will be your total principal amount.
  3. The amount you calculate is the interest rate you will pay for your first month's payment.

What is 6% interest on a $30,000 loan? ›

For example, the interest on a $30,000, 36-month loan at 6% is $2,856.

Are auto loan calculators accurate? ›

Calculators Only Provide Estimates

Because they are dependent on the accuracy of the information you enter, they may be different than what a dealership will really offer you. The best use for these calculators is in helping you compare cars.

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

Payment Example: $30,000 at 7.04% APR* for 60 months equals $594.60/month.

How do you calculate monthly loan payments and interest? ›

The formula is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where M is the monthly payment, P is the loan amount, i is the interest rate (divided by 12) and n is the number of monthly payments. To calculate monthly mortgage payments, you must know the loan amount, loan term, loan type and your credit score.

What is the formula for a car loan? ›

Car loan payment formula

Monthly payment = (loan amount) × (interest rate / 12) / (1 − (1 + (interest rate / 12)) ^ (-loan term)). The interest rate is given for a period of one year.

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.

What is 5% interest on a $20,000 loan? ›

Loan amount

If you borrow $20,000 over five years with a 5 percent interest rate, you'll pay $2,645.48 in interest on an amortized schedule.

What is 7% interest on $300000? ›

Monthly payments on a $300,000 mortgage

At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $1,996 a month, while a 15-year might cost $2,696 a month.

What is considered a bad auto loan rate? ›

Several factors could cause you to get a higher interest rate on your car loan. Generally, what's considered a bad interest rate is anything higher than 10%. Ideally, you want to get an interest rate that's below 5% — but with little or bad credit, that can be harder to achieve.

What FICO score do most auto lenders use? ›

What credit score do auto lenders look at? The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage.

Is 84 month car payment bad? ›

For most borrowers, an 84-month auto loan may not be the best idea due to high interest rates, increased risk and vehicle depreciation. However, an 84-month auto loan can be a good idea for borrowers who need lower monthly payments.

How to pay off a 5 year car loan in 3 years? ›

Below are the methods you should consider to pay off your car loan faster:
  1. Refinance your car loan.
  2. Split Your Bill Into Two Biweekly Payments.
  3. Make a large down payment.
  4. Round up your car payments.
  5. Review additional car expenses.

How much car can I afford on a $60000 salary? ›

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.

What's a good down payment on a 30k car? ›

Consider putting at least $6,000 down on a $30,000 car if you're buying it new or at least $3,000 if you're buying it used. This follows the guidelines of a 20% down payment for a new car or a 10% down payment for a used car.

How does interest rate affect my monthly car payment? ›

Your monthly car payment serves to pay down the loan's principal, as well as interest and fees. The higher your interest rate, the higher your monthly payment will be.

How do you calculate monthly interest on a car lease? ›

In a lease, an interest rate is called a money factor. You can convert a money factor into a simple interest rate by multiplying it by 2,400. So if you're offered a money factor of . 004, multiply it by 2,400 and see that it translates to an interest rate of 10 percent.

How to calculate finance charge on car loan? ›

Understanding Your Finance Charges
  1. Multiply your monthly payment by the number of months you'll be paying.
  2. Next, subtract the original principal (the amount of money you're borrowing to pay for the car) from that total.
  3. The resulting amount is your finance charge, or all of the interest you'll pay.
Mar 2, 2022

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