Auto Loan Calculator
Calculate your monthly car payment, total interest costs, and see how different down payments and loan terms affect your auto financing. Whether buying new or used, this calculator helps you budget for your next vehicle purchase and understand the true cost of car ownership.
How to Use This Auto Loan Calculator
1. Enter the vehicle price (the sticker or negotiated price of the car).
2. Input your down payment amount (cash you will pay upfront).
3. Add your trade-in value if you are trading in an existing vehicle.
4. Enter your state sales tax rate (varies by state, typically 4% to 10%).
5. Set the interest rate (APR) offered by your lender or dealership.
6. Select your desired loan term and click "Calculate Auto Loan".
What is an Auto Loan?
An auto loan is a secured loan used to purchase a vehicle, where the car itself serves as collateral. If you fail to make payments, the lender can repossess the vehicle. Because the loan is secured, interest rates are typically lower than unsecured personal loans, usually ranging from 3% to 15% depending on your credit score, the vehicle age, and market conditions.
Auto loans come from various sources including banks, credit unions, online lenders, and dealership financing. Loan terms typically range from 24 to 84 months. While longer terms mean lower monthly payments, they also result in paying more interest overall and potentially owing more than the car is worth (being "upside down" on the loan).
- New Car Loans: Lower rates (3-7%), terms up to 84 months
- Used Car Loans: Higher rates (5-12%), shorter terms common
- Down Payment: 20% recommended to avoid negative equity
- GAP Insurance: Covers difference if car is totaled while upside down
Auto Loan Payment Formula
The monthly payment is calculated using the standard loan amortization formula:
M = P[r(1+r)^n]/[(1+r)^n-1]
Where: M = Monthly payment, P = Principal (loan amount including tax), r = Monthly interest rate (APR / 12), n = Total number of payments.
The loan amount equals: Vehicle Price + Sales Tax - Down Payment - Trade-In Value. This calculator also estimates your cost per mile assuming 12,000 miles driven per year over the loan term, helping you understand the true cost of vehicle ownership.