Car loan calculator by credit score

How credit tiers change the rate

Lenders group borrowers into tiers, commonly super-prime, prime, near-prime, subprime and deep subprime, and price each tier differently. The gap between the best and the weakest tier can be ten points or more, which on a five-year loan is thousands of dollars.

The rates in the table below are illustrative inputs, not offers. Replace them with real quotes: pre-approvals from two or three lenders show your actual tier.

What to do if your score is low

Check your credit reports for errors, pay down card balances to lower utilization, and avoid several hard inquiries spread over months, since rate-shopping within a short window usually counts as one inquiry for auto loans. A larger down payment or a co-signer can also improve the rate. If the rate is very high, consider a cheaper car or waiting a few months to improve your score.

$27,380 financed over 5 years at each credit tier

These tier rates are illustrative inputs, not offers, and real rates move with the market. On $27,380, the gap between the top and bottom tier here is $11,236 in interest.

$27,380 financed: payment by loan length

At 9% APR, financing $27,380 (the $28,000 price plus 6% sales tax and $500 in fees minus $2,800 down) costs $568.36 a month over 60 months and $440.52 over 84 months. The longer loan lowers the payment by $127.84 but adds $2,902 in interest. Going the other way, 36 months raises the payment to $870.68 and cuts total interest to $3,964.

How the interest rate changes a 5-year loan

On the same $27,380 over 5 years, each full percentage point of APR moves the payment by about $13.38 and total interest by about $803. 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 $28,000 car at 9% 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 $1,267 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 $28,000 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, $568.36 a month points to a gross income of roughly $68,200 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 $28,000 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.