Car Loan Calculator

A widely used guideline is the 15% rule: keep your total monthly car payment at or below 15% of your gross monthly income. On a $60,000 annual salary that means about $750 per month at most. Another popular guideline is the 20/4/10 rule: put at least 20% down, finance for no more than 4 years, and keep total monthly vehicle costs under 10% of gross income. Enter your income in the calculator to see where the estimated payment lands against the 15% line.

Not automatically, but it is expensive. On a $25,000 loan at 7% APR, a 36-month term costs about $771.93 per month with $2,789.42 in total interest, while a 72-month term costs about $426.23 per month but $5,688.17 in total interest — more than double. Longer terms also keep you owing more than the car is worth for longer, which is risky if the car is totaled or you need to sell. Shorter terms almost always win on total cost.

Monthly payment = P × r(1+r)^n / ((1+r)^n − 1), where P is the amount financed, r is the monthly interest rate (APR divided by 12), and n is the number of payments. For example, financing $10,000 at 6% APR for 12 months gives r = 0.005 and a payment of about $860.66 per month. The calculator on this page applies this formula and then builds the full amortization schedule from it.

In most US states, sales tax is charged on the vehicle price minus any trade-in credit, because the trade-in reduces the taxable amount. A down payment generally does not reduce the taxable amount. This calculator follows that common convention: tax = (price − trade-in) × tax rate. A few states do it differently, so treat the tax line as an estimate and check your state rules.

Yes — every extra dollar down is a dollar you do not finance, so both the monthly payment and the total interest fall. For example, on a $30,000 car at 6.9% APR over 60 months with the same tax and fees, a $5,000 down payment gives about $508.37 per month, while a $7,000 down payment gives about $468.86 per month — a saving of $39.51 every month plus less interest overall.

It depends on your credit score, the lender, the loan term, and whether the car is new or used — borrowers with excellent credit are typically offered the lowest advertised rates, while lower scores mean higher rates. Rates also move with the broader economy, so any number quoted online can be stale. Use the APR field in the calculator to compare offers side by side: even a 1-point difference changes the total interest noticeably.

Yes. A trade-in reduces the amount you need to finance, which lowers both the monthly payment and the total interest. In most states it also reduces the taxable price of the new car, which lowers the sales tax line as well. Enter the actual cash value the dealer offers for your old car, not the price you hope to get.

Paying cash avoids interest entirely and is cheaper in pure dollar terms. Financing can still make sense if the APR is very low and you can earn more by keeping your cash invested or as an emergency buffer — but be honest about the comparison: compare the loan APR against a realistic after-tax return, and remember that a financed car usually requires full-coverage insurance, which adds cost. Run both scenarios in the comparison tool on this page before deciding.

Usually yes, and doing so saves you the remaining interest. Most auto loans in the US have no prepayment penalty, but some do — check your loan agreement before sending extra payments. If there is no penalty, even one extra principal payment per year can shave months off the term. The amortization schedule on this page shows exactly how much of each payment goes to interest, so you can see what early payments save.

Small input differences explain most gaps: dealer documentation fees, add-on products, a different tax basis, or a marked-up interest rate can all move the payment. Dealers may also quote with different down payment or term assumptions than you entered. Re-enter the quote line by line — price, down payment, trade-in, tax rate, fees, APR, term — and the difference usually reveals itself.

There is no single cutoff: approvals happen across the credit spectrum, but the score strongly shapes the APR you are offered. Higher scores unlock lower rates and preferred terms; lower scores can still get approved, often at higher rates or with a larger down payment required. If your score is a work in progress, a bigger down payment and a shorter term are the two levers that most reduce what a higher APR costs you.

Total interest is approximately the monthly payment multiplied by the number of payments, minus the amount financed. That is exactly what a car loan payment calculator with interest shows: in the worked example on this page, about $508.37 × 60 − $25,735 ≈ $4,767 in interest, refined to $4,767.26 in the amortization schedule after per-month rounding. A longer term or higher APR raises this number fast — compare scenarios in the tool above to see it.