Auto Loan Calculator
Calculate your monthly auto loan payment including trade-in value, sales tax, and total cost of ownership.
How Auto Loans Work
An auto loan is a secured loan where the vehicle itself serves as collateral. You borrow a specific amount (the vehicle price minus your down payment and trade-in) and repay it in fixed monthly installments over a set term, typically 36 to 72 months. Each payment includes both principal (paying down the loan balance) and interest (the lender's fee for lending the money).
The standard auto loan formula is: M = P[r(1+r)n] / [(1+r)n - 1], where M is the monthly payment, P is the loan amount (price minus down payment/trade-in plus taxes), r is the monthly interest rate (APR / 12), and n is the number of monthly payments. Early payments are mostly interest; later payments are mostly principal — this is called amortization.
Factors That Affect Your Auto Loan Rate
Credit score is the single biggest factor. In the current market: 750+: 4-6%, 700-749: 6-8%, 650-699: 8-12%, 600-649: 12-18%, Below 600: 18%+. Loan term also matters — 36-month loans typically carry lower rates than 72-month loans. New vs. used vehicles affect rates too: used car loans average 1-2% higher than new car loans. Down payment size reduces lender risk, potentially qualifying you for better rates.
Other factors include: the lender type (credit unions average 1-2% lower than dealership financing), your debt-to-income ratio, the vehicle's age and mileage, and whether you get pre-approved before shopping (gives you negotiating leverage at the dealership).
How to Get the Best Deal
Get pre-approved first. Visit your bank or credit union before the dealership. Pre-approval gives you a rate to beat, prevents dealer markup on financing, and lets you focus on negotiating the vehicle price rather than the monthly payment. Negotiate the total price, not the monthly payment. Dealers can manipulate monthly payments by extending the term — a $300/month payment over 72 months costs far more than $400/month over 48 months.
Put at least 20% down to avoid being "upside down" (owing more than the car is worth). Keep the term under 60 months — loans longer than 5 years often lead to negative equity and higher total cost. Skip dealer add-ons like extended warranties, gap insurance (buy it from your insurer for less), and paint protection — these add thousands in cost with minimal value.