Enter the amount financed after down payment and trade-in to see your monthly car payment and the true cost of the loan.
How the Auto Loan Calculator works
This calculator turns your car deal into a monthly payment by finding the amount financed first, then running the standard amortization formula. It is the same math your bank, credit union, and the dealer's finance office use, so the result matches your retail installment contract within rounding.The core formula is:
Monthly payment = P x [ i(1+i)n ] / [ (1+i)n - 1 ]
- P = amount financed (the principal you actually borrow on the car)
- i = monthly interest rate = annual APR / 12 (so 6% APR becomes 0.06 / 12 = 0.005)
- n = number of monthly payments = years x 12 (a 72-month loan is n = 72)
The piece unique to a car deal is P. The tool builds it like this:
- Start with the negotiated vehicle price - the number you agreed to, not the window sticker (MSRP).
- Subtract your cash down payment.
- Subtract your trade-in value - but add back any loan still owed on the trade, because that payoff balance gets rolled into the new note.
- Add sales tax, title, registration, and the dealer documentation fee if you finance them instead of paying cash at signing.
- The result is the amount financed, P - what most buyers call the "out-the-door" loan.
It then converts your APR to a monthly rate, your term to a number of months, and solves the formula for the payment.
Edge cases it handles: a manufacturer 0% APR promo (the formula would divide by zero, so the tool falls back to P / n - a $30,000 loan at 0% over 60 months is simply $500.00/month); a trade-in worth less than what you still owe (negative equity that gets added to P); rolling tax and fees in versus paying them up front; and any term from 24 to 84 months. It does not apply any tax break, because interest on a personal-use auto loan is not deductible on a US return - unlike a home mortgage. If you use the vehicle for business, a portion of the interest may be deductible, but that is a separate calculation outside this tool.
]]>Example calculation
Here are three real car-buying scenarios, every figure recomputed.Example 1 - New SUV through a credit union. Negotiated price $35,000, $5,000 cash down, a paid-off trade-in worth $3,000, and $2,500 of tax and fees rolled in. Amount financed = 35,000 - 5,000 - 3,000 + 2,500 = $29,500. At 5.5% APR for 60 months, i = 0.0045833 and n = 60. The payment is $563.48/month. Total paid = $33,809.06, of which $4,309.06 is interest.
Example 2 - Used sedan financed at the dealer. Price $22,000, $2,000 down, no trade-in, $1,800 tax and fees rolled in. Amount financed = 22,000 - 2,000 + 1,800 = $21,800. Used-car rates run higher, so at 9.9% APR for 72 months the payment is $402.76/month. Total = $28,999.07, with $7,199.07 in interest - nearly a third of the car's price added on top.
Example 3 - The same $30,000 loan at three terms. This shows term creep with everything else held at 7% APR.
| Term | Monthly payment | Total paid | Total interest |
|---|---|---|---|
| 60 months | $594.04 | $35,642.16 | $5,642.16 |
| 72 months | $511.47 | $36,825.85 | $6,825.85 |
| 84 months | $452.78 | $38,033.55 | $8,033.55 |
Stretching from 60 to 84 months drops the payment by about $141, but you pay $2,391 more in interest and stay underwater far longer on a car that keeps depreciating.
Putting the three deals side by side:
| Scenario | Amount financed | APR / term | Payment | Total interest |
|---|---|---|---|---|
| 1. New, credit union | $29,500 | 5.5% / 60mo | $563.48 | $4,309.06 |
| 2. Used, dealer | $21,800 | 9.9% / 72mo | $402.76 | $7,199.07 |
| 3. New, 84mo | $30,000 | 7% / 84mo | $452.78 | $8,033.55 |
Notice Example 2 finances less car than Example 1 yet pays more total interest - that is the combined drag of a higher used-car rate and a longer term.
]]>Tips for using the Auto Loan Calculator
- Negotiate the <strong>out-the-door (OTD) price</strong> - the total including tax, title, registration, and every dealer fee - never the monthly payment. A salesperson can hit any payment you name just by stretching the term; the OTD number is what you actually owe.
- Get pre-approved at a credit union or bank <em>before</em> you walk in. The dealer marks up the rate lenders quote them (the 'dealer reserve'), so a real pre-approval forces them to beat a number instead of selling you their margin.
- Cap your term at <strong>60 months on a new car and 48 on a used one</strong>. If the payment only works at 72 or 84 months, you are buying too much car - choose a cheaper one or save a bigger down payment.
- Put down enough cash that you are never underwater. A new car can shed about 20% of its value in year one, so a 0-5% down, 84-month loan almost guarantees you owe more than the car is worth for years.
- If you will be underwater early in the loan, buy <strong>gap insurance</strong> - but from your own auto insurer or credit union, not the dealer, where the identical coverage is routinely marked up two to three times.
- Compare every offer on <strong>APR</strong>, not the 'interest rate.' APR folds in some financing fees, so it is the only number that shows the true cost of one deal versus another.
- Never roll negative equity from your old car into the new loan. On a $25,000 note at 6% over 72 months, adding $4,000 of old debt raises the payment by about $66/month and the total interest by roughly $773 - and you start the new car already underwater.
- Decline dealer add-ons financed into the loan - extended warranties, paint sealant, VIN etching. At 9% APR over 72 months, a $2,000 add-on quietly costs you about $2,596 by the time it is paid off.
- Round every payment up and make one extra payment early. On the $29,500 / 5.5% / 60-month loan, an extra $50/month pays it off 5 months sooner and saves about $408 in interest, because the balance - and the interest on it - is highest at the start.
- Run the <strong>20/4/10 rule</strong> before you shop: at least 20% down, a 4-year (48-month) max term, and total monthly vehicle costs (payment plus insurance) under 10% of your gross income.
What 'amount financed' really means on a car deal
The amount financed is the negotiated price minus your down payment and trade-in equity, plus any tax and fees you roll into the loan - and it is the single number that drives your payment. Rate and term only shape how you pay that figure back.
Work it in order. Start from the negotiated price, not the sticker (MSRP) or the monthly payment. Subtract cash down. Subtract your trade-in's value - but if you still owe on the trade, that payoff balance gets added back in, because it rolls into the new loan. Then add sales tax, title, registration, and the dealer documentation fee if you are financing them rather than paying cash at signing.
This is why the 'out-the-door' (OTD) price matters more than the advertised price. A $28,000 car can become a $31,500 amount financed once tax and fees are stacked on and only a small down payment is applied - and you pay interest on every one of those rolled-in dollars for the life of the loan. Negotiate the OTD number and bring your own cash to shrink P directly. If you are still deciding how much to put up front, model it with the down payment calculator, then bring the financed amount back here. To estimate the tax piece for your state, the sales tax calculator helps before you decide whether to finance it or pay it at signing.
Depreciation, negative equity, and gap insurance
A new car can lose about 20% of its value in the first year, so when your loan balance falls slower than the car's value, you are 'underwater' - you owe more than the car is worth. This is the trap that makes long, low-down-payment auto loans dangerous, and it has no equivalent on a fixed asset like a house.
Here is a worked example. Finance $32,000 on an 84-month loan at 6.5% APR and the payment is $475.18. After 12 months you have paid the balance down to about $28,268. But a $30,000 car that lost 20% is now worth roughly $24,000 - meaning you are about $4,268 underwater after just one year. If the car is totaled or stolen, your insurer pays the ~$24,000 market value and you still owe the lender the difference out of pocket.
Gap insurance covers exactly that gap between what you owe and what the car is worth. Buy it whenever you make a small down payment or take a long term - but buy it from your own auto insurer or credit union, not the finance office, where the same coverage is marked up sharply. The cleaner fix is more cash down up front so you are never underwater in the first place. You can model how fast a vehicle loses value with the depreciation calculator and compare it to your payoff schedule.
60 vs 72 vs 84 months: why term creep costs you
A longer term lowers the monthly payment but raises the total interest and keeps you underwater longer - the trade is always more time for more money. Dealers push 72- and 84-month loans precisely because they let you 'afford' a bigger car on the same monthly budget.
Using a $30,000 loan at 7% APR:
| Term | Payment | Total interest | vs 60-month |
|---|---|---|---|
| 60 months | $594.04 | $5,642.16 | - |
| 72 months | $511.47 | $6,825.85 | +$1,183.69 |
| 84 months | $452.78 | $8,033.55 | +$2,391.39 |
The 84-month loan saves $141/month over the 60-month, but costs nearly $2,400 more in interest and means you are still paying on a 7-year-old car. Because a car depreciates the whole time, the longer term also stretches the window where you owe more than the car is worth - so if you sell or trade early, you write a check just to get out. Pick the shortest term whose payment fits your budget, then confirm it passes the 20/4/10 test below.
New vs used and dealer vs credit-union financing
Used cars carry higher interest rates than new ones, and dealer financing usually costs more than a credit union or bank because the dealer adds a markup. These two gaps can swing your total cost by thousands on the same priced car.
Lenders charge more on used cars because their value is harder to predict and they are repossessed more often. On the same $25,000 loan over 60 months:
| Loan type | APR | Payment | Total interest |
|---|---|---|---|
| New-car rate | 5.5% | $477.53 | $3,651.74 |
| Used-car rate | 9.5% | $525.05 | $6,502.79 |
Same loan amount, same term - the higher used-car rate alone costs about $2,851 more.
On financing source: the dealer sends your application to lenders, gets a wholesale 'buy rate,' and is allowed to mark it up before quoting you. Credit unions and banks quote their rate to you directly. Get pre-approved before you shop so the dealer has to beat a real number. The dealer can still win - sometimes the manufacturer's captive lender offers a subsidized 0% or low-APR deal - but you only know that if you carry an outside quote to compare against. For how interest accrues on any installment loan, see the general loan calculator.
The 20/4/10 rule: is this car affordable?
The 20/4/10 rule says put at least 20% down, finance for no more than 4 years (48 months), and keep total monthly vehicle costs - payment plus insurance - under 10% of your gross monthly income. It is the fastest sanity check on whether a car actually fits your budget.
Worked example: a $30,000 car with 20% down ($6,000) leaves $24,000 financed. At 5% APR over 48 months the payment is $552.70. Add roughly $150/month for insurance and your total is about $702.70. For that to stay under 10%, you would need gross income of at least $7,027/month - roughly $84,300/year.
If a car only fits when you stretch to 72 or 84 months, the rule is telling you it is too expensive: choose a cheaper car or save a bigger down payment, don't just lengthen the loan. For a deeper income-based breakdown, the loan affordability calculator works backward from your budget to a maximum car price, and the take-home pay calculator shows what is actually landing in your account each month.
Common mistakes that quietly cost you thousands
Most overpayment on a car loan comes from a handful of avoidable mistakes - shopping the payment, rolling in negative equity, financing add-ons, and accepting the dealer's first rate. Each one is invisible on the contract because it just nudges the monthly number you are watching.
- Negotiating the monthly payment instead of the OTD price. A salesperson can hit any payment by adding months. Lock the out-the-door price first, then discuss financing.
- Rolling old negative equity into the new loan. Adding $4,000 of old debt to a $25,000 note at 6% over 72 months raises the payment from $414.32 to $480.61 - about $66/month and roughly $773 in extra interest - and starts you underwater on day one.
- Financing dealer add-ons. A $2,000 extended warranty or paint package at 9% over 72 months costs about $2,596 by payoff. Buy what you truly want with cash, or skip it.
- Taking the dealer's first rate. Without an outside pre-approval you cannot tell the buy rate from the markup. One point of APR on a $30,000 / 60-month loan is well over $800 in interest.
- Putting little or nothing down. On a $30,000 / 5% / 60-month loan, $6,000 down instead of $0 cuts the payment by about $113/month and saves roughly $794 in interest - and keeps you above water.
How to do it by hand or in Excel
You can reproduce this calculator with one spreadsheet function: =PMT(). The syntax is =PMT(rate, nper, pv) where rate is the monthly rate, nper is the number of months, and pv is the amount financed entered as a negative number.
For Example 1 ($29,500 financed, 5.5% APR, 60 months):
- =PMT(0.055/12, 60, 29500) returns -$563.48 (negative because it is money leaving you).
- Use =PMT(0.055/12, 60, -29500) to get a positive $563.48.
To do it by hand, convert the APR to a monthly rate (5.5% / 12 = 0.0045833), raise (1 + i) to the n power, then plug into P x [ i(1+i)n ] / [ (1+i)n - 1 ]. For a manufacturer 0% promo the formula breaks (division by zero), so just divide the amount financed by the number of months.
To see the running balance, build an amortization table: each month's interest = balance x monthly rate, principal = payment - interest, and new balance = old balance - principal. That table is also how you prove the payoff: on the Example 1 loan, adding $50 to every payment clears it in 55 months instead of 60 and saves about $408 in interest, because early payments attack the highest balance.
Benchmarks and quick-reference coverage table
A good auto loan keeps the term at or below 60 months, the APR competitive for your credit tier, the down payment near 20% new (10% used), and total vehicle costs under 10% of gross income. Use these reference points to judge an offer at a glance.
| Factor | Healthy | Stretch | Red flag |
|---|---|---|---|
| Term (new) | 36-60 months | 72 months | 84+ months |
| Term (used) | 36-48 months | 60 months | 72+ months |
| Down payment | 20%+ new / 10%+ used | 5-10% | $0 down |
| Payment + insurance vs gross income | under 10% | 10-15% | over 15% |
| Negative equity rolled in | $0 | small, with big down | any large amount |
| Financing source | pre-approved bank/credit union | dealer matched to your quote | dealer-only, no comparison |
Two more checks. Borrowers with strong credit get far lower APRs than thin- or poor-credit buyers, and used-car rates run several points above new - so if your quote is dramatically higher than rates advertised to top-tier buyers, the cause is your credit, the term, or the dealer markup. And remember an auto payment feeds your debt-to-income ratio, which mortgage lenders scrutinize, so a big car payment can quietly shrink the house you qualify for. There is no tax offset for any of it: personal-use auto loan interest is not deductible on a US return.
Related on this site
Down Payment Calculator · Loan Affordability Calculator · Debt-to-Income Ratio Calculator · General Loan Calculator · Depreciation Calculator · Sales Tax Calculator
For a related deep dive, see CFPB auto loans.
Auto Loan Calculator — frequently asked questions
- Price or amount financed?
- Use amount financed: vehicle price minus down payment and trade-in, plus any taxes/fees rolled in.
- Why avoid long terms?
- Lower payments but far more interest, and you may owe more than the car is worth for years.
- What is negative equity?
- Owing more on the loan than the car is worth — common with long terms and small down payments.
- Should I take dealer financing or a bank loan?
- Compare both APRs here; dealer 0% offers can beat banks, but only for top-tier credit.
- What does 'amount financed' include on a car loan?
- The amount financed is your negotiated price minus your cash down payment and trade-in equity, plus any sales tax, title, registration, and dealer fees you choose to roll in. For example, a $35,000 car with $5,000 down, a $3,000 paid-off trade-in, and $2,500 of tax and fees rolled in is financed at $29,500. That figure - not the sticker price - is what your interest is charged on, so shrinking it with cash down directly lowers both your payment and your total interest.
- Should I negotiate the price or the monthly payment?
- Always negotiate the out-the-door (OTD) price, never the monthly payment. A salesperson can hit any monthly number you name simply by stretching the term to 72 or 84 months, which hides a higher total cost. The OTD price - everything including tax, title, registration, and fees - is the real number you owe. Lock that down first, then talk financing separately.
- Why are used-car interest rates higher than new-car rates?
- Used cars carry higher APRs because their resale value is harder to predict and they are repossessed more often, so lenders price in more risk. On a $25,000 loan over 60 months, a 5.5% new-car rate gives a $477.53 payment and $3,651.74 in interest, while a 9.5% used-car rate gives $525.05 and $6,502.79 - about $2,851 more interest for the identical loan amount and term.
- Is dealer financing more expensive than a bank or credit union?
- Usually, yes. The dealer sends your application to lenders, receives a wholesale 'buy rate,' and is allowed to mark it up before quoting you - that markup is the dealer's profit. Banks and credit unions quote their rate to you directly with no markup. Get pre-approved before you shop so the dealer has to beat a real number; sometimes a manufacturer's subsidized 0% deal will win, but you only know if you have an outside quote to compare.
- What is the 20/4/10 rule for buying a car?
- The 20/4/10 rule says put at least 20% down, finance for no more than 4 years (48 months), and keep total monthly vehicle costs - payment plus insurance - under 10% of your gross monthly income. For a $30,000 car with $6,000 down ($24,000 financed at 5% over 48 months), the payment is $552.70; adding ~$150 insurance gives about $702.70, which needs roughly $7,027/month (about $84,300/year) gross to pass the 10% test.
- How much does stretching a 60-month loan to 84 months really cost?
- Stretching lowers the payment but raises total interest sharply. On a $30,000 loan at 7% APR, 60 months costs $594.04/month and $5,642.16 in interest; 84 months drops the payment to $452.78 but raises interest to $8,033.55 - about $2,391 more. You also stay underwater far longer on a car that keeps depreciating, so the lower payment is borrowed time, not savings.
- What does it mean to be 'underwater' on a car loan?
- Being underwater (or upside down) means you owe more on the loan than the car is currently worth, which happens when depreciation outpaces your payoff. Finance $32,000 over 84 months at 6.5% and after one year you still owe about $28,268, but a $30,000 car that lost 20% is worth roughly $24,000 - leaving you about $4,268 underwater. If it is totaled, insurance pays only the market value and you owe the lender the rest.
- Do I need gap insurance on a car loan?
- Buy gap insurance whenever you make a small down payment or take a long term, because it covers the difference between what you owe and what the car is worth if it is totaled or stolen. Without it, your insurer pays only the car's market value and you owe the lender the shortfall. Buy it from your own auto insurer or credit union rather than the dealer's finance office, where the same coverage is often marked up two to three times.
- Should I take a 0% APR offer or a cash rebate?
- Run both through this calculator, because the answer depends on the numbers. A $30,000 loan at 0% over 60 months is exactly $500.00/month and $30,000 total. Take a $2,000 rebate instead and finance $28,000 at 5% over 60 months and the payment is $528.39 for $31,703.67 total - so here the 0% deal wins by about $1,704. With a larger rebate or a longer 0% term, the rebate can win, so always compare total cost.
- Is interest on a car loan tax-deductible?
- No - interest on a personal-use auto loan is not deductible on a US federal tax return, unlike home mortgage interest. The only exception is business use: if you use the vehicle for your business, you may deduct the business-use portion of the interest, but that is a separate calculation and does not apply to a personal car. Never count on a tax break to justify a car payment.
- What happens if I roll negative equity into a new car loan?
- Rolling the unpaid balance from your old car into the new loan raises both your payment and your total interest and puts you underwater immediately. Adding $4,000 of old debt to a $25,000 loan at 6% over 72 months pushes the payment from $414.32 to $480.61 - about $66/month more - and roughly $773 in extra interest. It is far cheaper to pay off or sell the old car before financing the next one.
- How much should I put down on a car?
- Aim for at least 20% down on a new car and 10% on a used one, both to pass the 20/4/10 rule and to avoid going underwater as the car depreciates. On a $30,000 loan at 5% over 60 months, $6,000 down instead of $0 cuts the payment by about $113/month and saves roughly $794 in total interest, while keeping your loan balance below the car's value from the start.
- Does making extra payments on a car loan help?
- Yes, and early extra payments help most because the balance - and the interest charged on it - is highest at the start of the loan. On a $29,500 loan at 5.5% over 60 months, adding $50 to every payment clears it in 55 months instead of 60 and saves about $408 in interest. Rounding each payment up to the next $50 is a simple way to do this without feeling it.
- What is the difference between APR and the interest rate on a car loan?
- The interest rate is just the cost of borrowing the principal, while the APR also folds in certain financing fees, making it the truer measure of cost. Because two loans with the same interest rate can have different fees, always compare competing offers on APR, not the headline rate. The APR is the number lenders are required to disclose so you can shop deals on equal footing.
- Should I finance the sales tax and fees or pay them up front?
- Paying tax, title, registration, and dealer fees in cash at signing is cheaper because rolling them into the loan means paying interest on them for years. On a typical car deal those costs can add $1,800 to $2,500 to the amount financed, and at, say, 7% over 72 months you would pay hundreds of dollars in extra interest just on the fees. If cash is tight, financing them is fine, but build that cost into your budget.
Guides & articles
- How to Calculate a Car Loan Payment
- How Much Car Can I Afford? The 20/4/10 Rule
- Upside Down on Your Car Loan? Negative Equity Explained
- Out the Door Price vs Sticker: What You Actually Finance
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