Auto Loan Calculator

Auto loan payments are calculated using the formula: P = L[c(1 + c)^n]/[(1 + c)^n - 1], where P is the monthly payment, L is the loan amount, c is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments. Our calculator handles this automatically when you enter the loan amount, interest rate, and loan term.

The interest rate is the basic cost of borrowing money, while APR (Annual Percentage Rate) includes the interest rate plus any additional fees like origination fees, processing fees, and other loan costs. APR gives a more complete picture of the loan's true cost. Always compare APRs when shopping for auto loans.

A larger down payment reduces your loan amount, which lowers your monthly payments and total interest costs. For example, on a $25,000 car, a $5,000 down payment means you only finance $20,000. This could save you hundreds or thousands in interest over the loan term.

Shorter loan terms (36-48 months) typically have lower interest rates and less total interest paid, but higher monthly payments. Longer terms (60-72 months) have lower monthly payments but higher total interest costs. Choose based on your budget and how long you plan to keep the vehicle.

Your credit score significantly impacts your auto loan interest rate. Excellent credit (720+) typically gets rates around 3-5%, while poor credit (below 580) might get rates of 15-20% or higher. Improving your credit score before applying can save thousands in interest.

Yes! Getting pre-approved gives you negotiating power at the dealership and helps you know your budget. Pre-approval shows you're a serious buyer and can help you avoid high-pressure sales tactics. Compare rates from multiple lenders before choosing.

Negative equity occurs when you owe more on your current car than it's worth. If you trade in a car with negative equity, the remaining balance gets added to your new loan. This increases your new loan amount and monthly payments. It's often better to pay off negative equity before trading in.

Most auto loans don't have prepayment penalties, but some lenders may charge fees for early payoff. Always check your loan agreement or contact your lender before making extra payments. Prepayment penalties can offset or eliminate your interest savings from early payoff.

The total cost includes the principal amount plus all interest paid over the loan term. Our calculator shows this as 'Total Interest' and 'Total Cost'. For example, a $20,000 loan at 5% for 60 months costs $2,645 in interest, making the total cost $22,645.

Leasing typically has lower monthly payments but you don't own the car. Buying builds equity and you own the vehicle after the loan is paid. Consider your driving habits, how long you keep cars, and whether you want to customize or modify the vehicle. Leasing is often better for those who want a new car every few years.