Car Loan Payment Calculator
Enter the price of the car and the terms you have been offered. The calculator adds sales tax and dealer fees to the amount financed, because those are usually rolled into the loan rather than paid up front.
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How a car loan payment is calculated
A car loan is a standard amortising loan. Every payment is the same size, but its split changes: early payments are mostly interest, later ones mostly principal. The payment itself comes from three inputs — the amount financed, the monthly interest rate, and the number of months.
The amount financed is not the same as the price. It is the price, plus sales tax and fees, minus your down payment and any trade-in. Dealers quote payments off the financed amount, which is why a quote can look better than the price suggests.
Why the term matters more than it looks
Lengthening the term is the easiest way to reduce a monthly payment and the most expensive. The payment falls roughly in proportion to the extra months, but the interest keeps accruing on a balance that now comes down more slowly. On a typical loan, going from 48 months to 84 can cut the payment by a third while nearly doubling the interest.
There is a second cost that does not show up in the interest figure. A car depreciates faster than a long loan pays down, so a 72 or 84 month loan leaves you owing more than the car is worth for several years. If you need to sell or the car is written off, you have to cover that gap yourself.
The rate you are quoted is not fixed in advance
Dealer financing is often marked up over the rate the lender actually approved. Getting a pre-approval from your own bank or credit union before you walk in gives you a number to compare against, and gives the dealer something to beat.
A sensible sanity check
A widely used rule of thumb is 20/4/10: put at least 20 percent down, finance for no more than four years, and keep total transport costs — payment, insurance and fuel together — under 10 percent of your gross income. It is conservative, and worth knowing how far from it your plan sits even if you decide to ignore it.
Frequently asked questions
What is a good APR on a car loan?
It depends mostly on your credit score and on whether the car is new or used. Borrowers with strong credit are usually offered rates several percentage points below the market average, and used-car rates run higher than new-car rates. Compare at least one bank or credit union quote against the dealer offer before signing.
Does a bigger down payment reduce the interest rate?
Not directly, but it can. It always reduces the amount financed, and therefore the total interest. Some lenders also price the loan partly on the loan-to-value ratio, so a larger down payment can move you into a better rate tier.
Should I take the 0% financing or the cash rebate?
Compare them properly. Take the rebate amount off the price and calculate the payments at the rate you would get from your own bank, then compare the total against the 0% deal at full price. Which one wins depends on the size of the rebate, the outside rate available to you, and the term.
Can I pay off a car loan early?
Usually yes, and on a standard amortising loan that saves you the remaining interest. Check whether your agreement has a prepayment penalty or uses a precomputed-interest structure, because those change the arithmetic.