Use our car loan calculator to determine your potential monthly payment and the total amount of interest you would pay for a new or used car loan.

## Auto Loan Payment Calculator Results Explained

Enter the following information into the car loan calculator to use it:

**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 cars price to determine the loan amount.

**Term:**The amount of time you have to repay the loan. In general, 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 dont know the interest rate, this can help determine the rate youll 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.

The auto loan payment calculator will display the results after you enter the information and will include the following dollar amounts:

**Total monthly payment:**The amount youll 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 youll borrow to buy the car.

**Total interest paid:**The total amount of interest youll have paid over the life of the loan. In general, the longer you take to repay the loan, the more interest you pay overall. Add together the total principal paid and total interest paid to see the total overall cost of the car.

To find a car that fits your budget and to bargain for the best price, use the auto loan calculator before you visit the dealership.

## How Is Interest Calculated on a Car Loan?

A calculator for auto loans displays the total interest you’ll pay over the course of the loan. You can see how much interest you’ll pay each month if the calculator provides an amortization schedule. Most car loans have a principal (the amount you borrow) and an interest component to each payment.

Your monthly interest payment is calculated using the loan’s then-current balance. Therefore, you pay a higher interest rate in the beginning of the loan when the balance is higher. The interest component of the monthly payments decreases as you gradually pay off the balance.

If you’re up for a little math, you can figure out how much interest you owe using the car loan calculator or by hand. Here is the formula you can use to manually determine your monthly car loan interest:

Here’s an illustration using a balance of $30,000 and a 6% interest rate:

Divide the percent by 100 and eliminate the percent sign to convert a percent to a decimal. For example, 6% becomes the decimal 0. 06 (6 ÷ 100 = 0. 06).

## What Is a Good APR for a Car Loan?

The cost of the vehicle may significantly increase due to interest on auto loans. As an illustration, the interest on a $30,000 loan for 36 months at 6% is $2,856. Interest on the same loan ($30,000 at 6%) over a 72-month repayment period would be $5,797.

Of course, even minor changes in your rate have an effect on the overall amount of interest you pay. A $30,000, 72-month loan at 5% has a total interest cost of $4,787, which is more than $1,000 less than the same loan at 6%.

Therefore, it pays to compare prices to get the best deal. While interest rates differ between lenders, your rate also depends on the following factors:

**Federal Reserve interest rates:**When the Fed keeps interest rates low, you pay less to borrow money.

**Your credit score:**In general, the better your credit, the lower your interest rate will be.

**Your debt-to-income ratio (DTI):**Your DTI shows how much of your gross monthly income goes toward paying your monthly debts. The lower your DTI, the lower your interest rate will be.

**Loan type:**Loans for used cars have higher rates than those for new cars (because used cars have a lower resale value).

**The loan term:**Longer loan terms usually have higher interest rates.

The best way to determine a good APR for a car loan is to look at averages. According to Experian’s State of the Automotive Finance Market report for the second quarter of 2021, these are the typical new and used car loan rates by credit score:

Average New and Used Car Loan Rates by Credit Score | ||
---|---|---|

Credit Score Tier | Credit Score Range | Average New Car Rate |

Deep Subprime | 300 – 500 | 14.59% |

Subprime | 501 – 600 | 11.03% |

Nonprime | 601 – 660 | 6.61% |

Prime | 661 – 780 | 3.48% |

Super Prime | 781 – 850 | 2.34% |

A “good” rate is typically one that is equal to or, ideally, lower than the average for your credit score. The price of those averages over the course of a five-year, $30,000 loan is shown below:

What $30,000 Loans Cost Over 5 Years | |
---|---|

Credit Score Range | Total Interest |

300 – 500 | $12,435.47 |

501 – 600 | $9,163.30 |

601 – 660 | $5,311.88 |

661 – 780 | $2,729.02 |

781 – 850 | $1,818.42 |

## How Can I Calculate My Car Payment?

Our loan calculator displays the monthly payment and total interest costs associated with a loan. To find a loan that fits your monthly budget and the total amount of interest you’re willing to pay, it can be helpful to use the calculator to test out various scenarios.

The best way to lower the interest rate on an auto loan is to raise your credit score. If you have bad credit, think about delaying buying a car (if at all possible) until you raise it.

Divide the total loan and interest amount by the loan term (the number of months you have to repay the loan), which will give you your monthly car loan payment. For instance, $3,150 would be the total interest on a $30,000 loan for 60 months at 4%. So, your monthly payment would be $552. 50 ($30,000 + $3,150 ÷ 60 = $552. 50).

If you took a three-month payment freeze on a loan because you were experiencing financial difficulties related to COVID-19, your subsequent repayments might be a little bit higher to make up for it.

The longer it takes you to pay back a loan, the more interest you’ll end up paying overall—and your interest rate will probably be higher as well. If at all possible, make a down payment and strive for the shortest loan term with a payment you can still afford. Additionally, bear in mind that a car has costs in addition to the loan payment. Make sure you’ll have extra cash on hand to pay for things like car insurance, gas, parking, maintenance, and other expenses.

## Is a 72-month car loan a good idea?

Since auto loans frequently have variable interest rates, a shorter loan term might be preferable in an environment of rising rates. Although your monthly payments may be a little lower than those for a loan with a 60-month term, you will end up paying more interest overall. A longer loan can also cause you to become “upside-down,” where the value of your car is less than the remaining balance on the loan, as cars depreciate over time.

## Can you negotiate the APR for a car loan?

This will depend on the lender’s identity and your creditworthiness. Auto loan originators like car dealers may have more flexibility when negotiating interest rates to close deals. Additionally, lenders are not typically required to provide you with their best interest rate, so haggling may result in savings of hundreds or even thousands of dollars over the course of the loan.

## Why do dealers often want you to finance?

Car dealers are interested in having you finance your vehicle rather than paying cash because they profit from lending money to customers. This can take the form of loan interest payments, commissions, or origination fees. Article Sources Investopedia mandates that authors cite original sources to back up their arguments. White papers, official data, original reporting, and interviews with industry professionals are some of these. When necessary, we also cite original research from other respected publishers. On our website, you can read more about the guidelines we adhere to when creating truthful, unbiased content.