Car Loan Calculator

Calculate your monthly car payment, total interest, and total cost of auto financing. Compare different loan terms and down payments.

Car Price ($)

Down Payment ($)

Trade-In Value ($)

Interest Rate (% per year)

Loan Term (years)

Monthly Payment

Loan Amount: $0

Total Paid: $0

Total Interest: $0

How to Finance a Car

Our car loan calculator helps you understand the true cost of financing a vehicle. By comparing different scenarios, you can make informed decisions about down payment, loan term, and interest rate.

Understanding Car Loan Terms

Car Price: The total purchase price of the vehicle before any down payment or trade-in.

Down Payment: The upfront cash payment you make. Larger down payments reduce your loan amount and monthly payment.

Trade-In Value: The value of your current vehicle that's applied toward the purchase.

Interest Rate: The annual percentage rate (APR) charged by the lender. Rates typically range from 3% to 10% based on credit score.

Loan Term: The length of time to repay the loan, typically 3-7 years. Longer terms have lower monthly payments but more total interest.

The 20/4/10 Rule

Financial experts recommend:

20% Down Payment: Put at least 20% down to avoid being underwater
4-Year Loan Maximum: Don't finance for more than 4 years
10% of Gross Income: Total car expenses (payment + insurance + gas) shouldn't exceed 10% of gross income

Car Buying Tips

New vs Used Cars

New Cars: Higher price, but warranty coverage, latest features, and no previous damage. Depreciate 20-30% in first year.

Used Cars: Better value, less depreciation, but no warranty (unless certified pre-owned). Check history report and get inspection.

Certified Pre-Owned: Middle ground - used cars with manufacturer warranty, typically 2-5 years old with low mileage.

Get Pre-Approved

Get financing pre-approval from banks or credit unions before shopping. This gives you:

Negotiating power (you're a cash buyer to the dealer)
Knowledge of your budget and interest rate
Ability to compare dealer financing offers
Faster purchase process

Hidden Costs to Consider

Sales Tax: 5-10% of purchase price (varies by state)
Registration & Title: $100-$500
Insurance: $100-$300/month depending on coverage and car
Maintenance: Oil changes, tires, repairs ($500-$1,500/year)
Fuel: Varies greatly by vehicle and usage
Depreciation: Cars lose 15-25% value per year for first 5 years

Negotiating Tips

Research fair market value using Kelley Blue Book or Edmunds
Negotiate the total price, not monthly payment
Don't mention trade-in until price is agreed upon
Shop at month-end or year-end for better deals (dealers have quotas)
Be willing to walk away - it's your strongest negotiating tool
Avoid dealer add-ons (extended warranties, paint protection) - usually poor value

Frequently Asked Questions

What's a good interest rate for a car loan?

Rates vary by credit score. Excellent credit (720+): 3-5%, Good (680-719): 4-7%, Fair (640-679): 6-10%, Poor (<640): 10%+. Credit unions typically offer rates 0.5-1% lower than banks. Shop around and get pre-approved to secure the best rate.

How much should I put down on a car?

Aim for at least 20% down on new cars and 10% on used cars. Larger down payments reduce your loan amount, monthly payment, and total interest paid. It also helps avoid being "underwater" (owing more than the car's worth) due to rapid depreciation.

Should I choose a 3, 5, or 7-year loan?

Shorter is better financially. 3-year loans have higher monthly payments but much lower total interest. 5 years is most common, balancing affordability and total cost. Avoid 6-7 year loans - you'll likely be underwater and pay significantly more interest. Never finance longer than you plan to keep the car.

Can I pay off my car loan early?

Most car loans allow early payoff without penalties, but verify with your lender. Paying extra toward principal each month or making a lump sum payment can save hundreds or thousands in interest and free up monthly cash flow sooner.

Should I finance through the dealer or my bank?

Compare both. Dealers may offer promotional 0% APR financing, but these require excellent credit and often mean giving up rebates. Your bank or credit union might offer better rates. Get pre-approved from your bank, then see if the dealer can beat it.

What if I'm upside down on my current car?

Being "upside down" or "underwater" means owing more than the car's worth. Avoid rolling negative equity into a new loan if possible - it starts you underwater on the new car. Better options: pay down the loan, keep the car longer, or sell privately to get a better price than trade-in value.

Is leasing better than buying?

Leasing pros: lower monthly payments, new car every few years, warranty coverage. Cons: no equity, mileage limits (10-15k/year), fees for excessive wear, and you never own it. Buying is better long-term financially - you build equity and have no restrictions once paid off.

How does my credit score affect my car loan?

Credit score dramatically impacts interest rates. On a $25,000 5-year loan: at 4% (excellent credit) you pay $2,630 interest, at 10% (poor credit) you pay $6,749 interest - a $4,000+ difference. Improve credit before car shopping if possible.