Auto Loan Calculator
Calculate Your Auto Loan Payment
About Auto Loans
An auto loan is a secured loan used to purchase a vehicle. The vehicle serves as collateral, meaning if you fail to make payments, the lender can repossess it. Auto loans typically have terms ranging from 3 to 7 years.
Our auto loan calculator helps you estimate your monthly payments and understand the total cost of your loan, including interest.
Key Factors
- Loan Amount: Vehicle price minus down payment and trade-in value, plus taxes and fees
- Interest Rate: Determined by your credit score, loan term, and market conditions
- Loan Term: Longer terms mean lower monthly payments but more interest paid overall
- Down Payment: Larger down payments reduce the loan amount and monthly payments
Tips for Better Rates
- Improve your credit score before applying
- Shop around and compare offers from multiple lenders
- Consider a shorter loan term to get lower interest rates
- Make a larger down payment if possible
- Consider getting pre-approved before visiting dealerships
Related Calculators
Frequently Asked Questions
How is the monthly payment calculated?
The monthly payment is calculated using the loan amount, interest rate, and loan term. We use the standard amortization formula: PMT = P × [r(1+r)ⁿ]/[(1+r)ⁿ-1], where P is the principal (loan amount), r is the monthly interest rate, and n is the total number of payments.
Should I choose a longer or shorter loan term?
A shorter loan term typically means higher monthly payments but less interest paid overall. A longer term reduces your monthly payments but increases the total interest paid. Choose based on what monthly payment fits your budget and how quickly you want to pay off the loan.
How much down payment should I make?
Financial experts typically recommend a down payment of at least 20% of the vehicle's price. This reduces the loan amount, possibly helps secure a better interest rate, and prevents being "underwater" (owing more than the car is worth) early in the loan.
Is it better to pay off an auto loan early?
Paying off an auto loan early can save you money on interest. However, check if your loan has any prepayment penalties. Also, consider your other financial priorities; if you have higher-interest debt or need to build an emergency fund, those might be better uses for your extra cash.
How does a trade-in affect my auto loan?
A trade-in reduces the amount you need to finance because its value is subtracted from the purchase price of the new vehicle. This results in a lower loan amount and consequently lower monthly payments and less interest paid over the life of the loan.