Auto Loan Calculator

Calculate your car loan's monthly payment, total interest and true cost from price, down payment, APR and loan term.

Inputs

Vehicle price

Down payment

APR

Loan term (months)

Results

Monthly payment

$528.29

Total interest

$4,697.16

Amount financed

$27,000.00

Total cost of car

$36,697.16

Interest share

14.8%

A bigger down payment and shorter term both cut total interest sharply. Watch out for 84-month loans — the lower payment hides thousands in extra interest.

Comprehensive Guide & Formulas

By CalcSuite Editorial TeamUpdated 17 October 20268 min read

Direct Summary / AI Overview

Monthly payment & interest

Key Takeaways & Benchmarks

✓Payment = P × r ÷ (1 − (1+r)^−n); total interest = payment × n − P.
✓Longer terms lower payments but raise total interest substantially.
✓10–20% down protects against going underwater.
✓Negotiate price and financing separately at the dealership.
✓Budget full ownership cost — payment, insurance, fuel, maintenance.

How auto loan math works

An auto loan is amortised: each monthly payment first covers that month's interest, and the rest reduces principal. Early payments are interest-heavy; later ones are principal-heavy. The APR and term together determine how much of your money goes to the lender versus the car.

Two choices dominate the outcome: down payment and term length. More down means less financed and less interest. Shorter term means a higher payment but dramatically less interest — and faster equity as the car depreciates.

1
Enter the vehicle price
The out-the-door price before down payment.
2
Set your down payment
10–20% down is the healthy range.
3
Add APR and term
Your rate and the loan length in months.
4
Read the true cost
Monthly payment, total interest and total cost.

The formula

"Monthly rate = APR ÷ 12"

"Payment = P × r ÷ (1 − (1 + r)^−n)"

"P = amount financed, n = number of months"

"Total interest = (payment × n) − P"

Worked example

$32,000 car, $5,000 down, 6.5% APR, 60 months: $27,000 financed at a 0.5417% monthly rate gives a payment of about $528/month. Total paid is $31,700 — roughly $4,700 in interest — for a $36,700 all-in cost.

Stretch to 84 months and the payment drops to about $400, but interest climbs to roughly $6,700 — $2,000 more for the privilege of paying longer. The 60-month buyer owns the car free and clear two full years earlier.

Borrowing smart

▸Get pre-approved by your bank or credit union before visiting the dealer.
▸Negotiate the car price first, then discuss financing — never as one monthly-payment bundle.
▸Put at least 10–20% down to avoid going underwater.
▸Prefer the shortest term whose payment fits your budget comfortably.
▸Budget insurance, fuel and maintenance — the payment is only part of ownership cost.

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Frequently asked questions

How is a car loan monthly payment calculated?+

With the standard amortisation formula: payment = P × r ÷ (1 − (1+r)^−n), where P is the amount financed, r the monthly rate and n the number of months. A $27,000 loan at 6.5% APR over 60 months costs about $528/month. This calculator applies the formula and also shows total interest and the car's true cost.

How much car can I afford?+

The common guideline is the 15% rule: total car expenses (payment, insurance, fuel, maintenance) shouldn't exceed 15% of take-home pay — with the payment itself ideally under 10%. On $5,000/month take-home, that's roughly a $500 payment ceiling. Always budget the full ownership cost, not just the loan.

Is a longer loan term better?+

It lowers the monthly payment but raises total interest significantly — and keeps you owing more than the car is worth for longer. A $27,000 loan at 6.5%: 60 months costs ~$4,700 in interest; 84 months costs ~$6,700. Shorter terms also build equity faster, protecting you if you need to sell.

Should I put money down on a car loan?+

Yes — 10–20% down is the healthy range. It reduces the amount financed (and thus interest), lowers the monthly payment, and guards against being 'underwater' (owing more than the car's value) as depreciation hits hardest in year one.

What is a good APR for a car loan?+

It depends on your credit score and whether the car is new or used. As a rough illustration, borrowers with excellent credit might see rates near 5–6% on new cars, while weaker credit can mean 10%+ — a difference worth thousands over the loan. Always compare the dealer's offer against your bank or credit union before signing.

Should I pay cash or finance a car?+

If the loan APR is well below what your cash could earn invested — and you keep an emergency fund intact — financing can make sense. But most buyers overestimate investment returns and underestimate the stress of payments. Paying cash for a cheaper car beats financing an expensive one in almost every scenario the Compound Interest Calculator can model.

What does 'underwater' on a car loan mean?+

Owing more than the car is worth — common in the first 1–2 years because cars depreciate fastest immediately. Big down payments and shorter terms prevent it. Being underwater traps you: you can't sell without paying the difference out of pocket.

Are dealer add-ons worth financing?+

Rarely. Extended warranties, paint protection and similar add-ons are high-margin products rolled into the loan, where you also pay interest on them for years. Evaluate each on its own merits at its cash price — never let a monthly-payment quote hide the total cost.