Auto loan calculator

What goes into an auto loan payment

Your car payment depends on the amount financed, the APR and the term. The amount financed is the price plus tax and fees, minus your down payment and trade-in. Enter each part separately so you can see how much of the loan is the car and how much is tax and fees.

Dealers often negotiate on monthly payment, which hides the total cost. Check the term and total interest too: the same payment can mean a short loan on a cheap car or a very long loan on an expensive one.

Before you sign

Get a pre-approval from a bank or credit union, compare the APR rather than the payment, decline add-ons you do not want and confirm there is no prepayment penalty. If the dealer offers a better rate than your pre-approval, take it, but read the contract for anything added to the amount financed.

$29,300 financed: payment by loan length

At 7% APR, financing $29,300 (the $30,000 price plus 6% sales tax and $500 in fees minus $3,000 down) costs $580.18 a month over 60 months and $442.22 over 84 months. The longer loan lowers the payment by $137.96 but adds $2,335 in interest. Going the other way, 36 months raises the payment to $904.70 and cuts total interest to $3,269.

How the interest rate changes a 5-year loan

On the same $29,300 over 5 years, each full percentage point of APR moves the payment by about $13.92 and total interest by about $835. Rates depend on your credit score, the loan term and whether the car is new or used, so get a pre-approval from a bank or credit union before you walk into a dealership.

What a bigger down payment does

A down payment reduces what you finance, which cuts both the payment and the interest, and it protects you from owing more than the car is worth early in the loan, when new cars depreciate fastest. Here is the same $30,000 car at 7% over 5 years with different down payments.

Paying extra

Adding $100 a month to this loan would pay it off 10 months sooner and save $968 in interest, as long as your lender applies extra money to principal and charges no prepayment penalty. Ask before you start.

Can you afford a $30,000 car?

A common rule of thumb, the 20/4/10 guideline, suggests 20% down, a term of at most 4 years and total car costs under 10% of gross income. On payment alone, $580.18 a month points to a gross income of roughly $69,600 a year to stay at 10%, before insurance, fuel and maintenance. Here the down payment is 10% rather than 20% and the term of 60 months is longer than 48, which means a smaller monthly payment in exchange for more interest and a longer period of debt.

Will you owe more than the car is worth?

New cars commonly lose around 20% of their value in the first year and roughly 15% a year after that, though this varies by model. Using that rough rule on a $30,000 car, you would likely owe more than the car is worth until about year 2. Gap insurance can cover the difference if the car is totaled while you are underwater.