Auto Loan Calculator
Monthly payment · Total cost · Sales tax · Trade-in · Fees · Down payment · Amortization · Reverse mode
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How to Use This Auto Loan Calculator
This calculator has two modes: Calculate from Car Price (standard mode) computes your monthly payment given a vehicle price, and Calculate from Monthly Budget (reverse mode) finds the maximum car price you can afford given your target payment.
Understanding Auto Loan Inputs
- Auto Price: The negotiated price of the vehicle - this is what you bargain the dealer down to, not the MSRP sticker price.
- Loan Term: Most auto loans run 36-84 months. Longer terms lower monthly payments but increase total interest. Industry data shows the average new car loan is now ~68 months.
- APR (Annual Percentage Rate): The annual interest rate including fees. Your APR depends on your credit score, the lender, loan term, and whether the vehicle is new or used.
- Down Payment: Cash paid upfront. Reduces loan amount, monthly payment, and total interest. A 20% down payment is recommended to avoid being "underwater" on the loan.
- Trade-in Value: What the dealer offers for your current vehicle. Reduces the amount you need to finance. Get multiple trade-in quotes (CarMax, Carvana, KBB Instant Cash Offer) before accepting the dealer's first offer.
- Amount Owed on Trade-in: Your remaining loan balance on the traded vehicle. If this exceeds trade-in value, the difference (negative equity) is rolled into your new loan.
- Cash Incentives/Rebates: Manufacturer rebates reduce the effective vehicle price. Some states tax the pre-rebate price; others tax the post-rebate price. This calculator treats rebates as a price reduction.
- Sales Tax: Most states charge 4-10% sales tax on vehicle purchases. Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
- Title, Registration & Fees: Document fees, title fees, registration, advertising fees. Typically $300-$1,500 depending on state and dealer.
Auto Loan Formula
M = L × [ r(1+r)ⁿ ] ÷ [ (1+r)ⁿ - 1 ]
M = monthly payment · L = loan amount · r = monthly rate (APR ÷ 12) · n = months
Auto Loan Rates by Credit Score
Your credit score is the single biggest factor in your auto loan APR. Here are typical 2026 rates for new car loans:
| Credit Score | Tier | Typical New Car APR | Typical Used Car APR |
|---|---|---|---|
| 750+ | Super Prime | 4.0% - 6.5% | 5.5% - 8.0% |
| 700-749 | Prime | 6.5% - 8.5% | 8.5% - 11% |
| 660-699 | Near Prime | 8.5% - 11% | 11% - 14% |
| 600-659 | Subprime | 11% - 16% | 14% - 20% |
| Below 600 | Deep Subprime | 16% - 25%+ | 20% - 29%+ |
Impact of rate on a $35,000 loan (60 months): At 5% APR you pay $3,307 in interest. At 15% APR you pay $10,199 in interest - over $6,800 more. Improving your credit score before applying for an auto loan can save thousands.
New Car vs. Used Car Loan Rates
Used car loans typically carry higher interest rates than new car loans, for two reasons: (1) used vehicles are higher-risk collateral (they can lose value faster), and (2) manufacturers don't offer subsidized financing on used cars. The rate difference is typically 1.5-3 percentage points. However, the lower sticker price of a used vehicle may more than offset the higher rate.
| New Car ($35,000) | Used Car ($22,000) | |
|---|---|---|
| Typical APR (good credit) | 6.5% | 8.5% |
| Monthly payment (60 mo) | $686 | $452 |
| Total interest | $6,160 | $5,120 |
| Total cost | $41,160 | $27,120 |
Dealership Financing vs. Direct Lending
When buying a car, you have two main financing options:
Direct Lending (Bank, Credit Union, Online Lender)
- Get pre-approved before visiting the dealership - you know your rate and maximum loan amount
- More negotiating power: the dealer knows you have financing and must compete
- Credit unions typically offer the lowest auto loan rates - often 1-2% below banks
- Online lenders (LightStream, PenFed, Capital One Auto) offer competitive rates and fast approval
Dealership Financing (Captive Lenders)
- Convenient - done at the dealership during purchase
- Manufacturers sometimes offer 0% or low-rate promotions (0%, 0.9%, 1.9%) on new models
- The dealer earns a "dealer reserve" - a markup on the rate the lender offers. This means dealer rates can be inflated by 1-2% above what you'd get directly
- 0% financing offers often require you to forgo the cash rebate option - always calculate which is better
Best practice: Get pre-approved from your bank or credit union first. Then visit the dealer. If the dealer can beat your pre-approval rate, great. If not, use your own financing. This approach gives you maximum leverage and transparency.
Negative Equity & Being "Upside Down" on Your Car Loan
You are "upside down" or have negative equity when you owe more on your car loan than the car is currently worth. This happens because:
- New cars depreciate 15-25% in the first year alone
- Long loan terms (72-84 months) allow depreciation to outpace principal paydown
- Rolling negative equity from a trade-in into a new loan compounds the problem
- Low or no down payments mean little equity from day one
Negative equity is risky: if your car is totaled or stolen, insurance pays the market value - not the loan balance. If you owe $28,000 but the car is worth $22,000, you're responsible for the $6,000 gap (unless you have GAP insurance).
GAP Insurance (Guaranteed Asset Protection): Covers the difference between what you owe and what insurance pays if the vehicle is totaled or stolen. Usually costs $200-$400 for the loan term and is worth it if your loan-to-value ratio exceeds 100%.
Frequently Asked Questions
What is a good monthly car payment?
Financial experts recommend keeping total car expenses (payment, insurance, gas, maintenance) below 15-20% of take-home pay. For someone taking home $4,000/month, that's $600-$800 total - meaning a car payment of $400-$500/month leaving room for insurance and fuel. The 20/4/10 rule: 20% down, 4-year max term, 10% of gross income on total car costs.
Should I choose 60 months or 72 months?
A 72-month term reduces monthly payments by roughly 15% vs. 60 months, but increases total interest paid by 20-30%. On a $35,000 loan at 6.5%, the difference is about $100/month less but $1,200 more in total interest. The bigger risk with 72 months is prolonged negative equity - you're more likely to owe more than the car is worth for longer, limiting your options if you need to sell or trade in.
Is 0% financing really free?
0% APR loans are offered by manufacturers to incentivize sales - but they typically require you to forgo the cash rebate option. For example, a $35,000 car might offer either 0% financing OR a $3,500 cash rebate. If you finance $35,000 at 0% for 60 months, you pay $0 interest. But if you took the rebate, financed $31,500 at 6% for 60 months, you'd pay $5,040 in interest - but saved $3,500 upfront, for a net extra cost of only $1,540. The math favors 0% in most cases, but calculate both options for your specific scenario.
What fees should I expect when buying a car?
Common car buying fees: (1) Sales tax: 0-10% depending on state. (2) Title fee: $15-$100. (3) Registration fee: $50-$300+. (4) Documentation/dealer fee: $100-$900 (varies widely; negotiable in some states). (5) Destination fee: $900-$2,000 for new cars (non-negotiable). (6) Advertising fee: $200-$600. Avoid: VIN etching, paint protection, fabric protection - these are high-margin add-ons with minimal value. Always ask for a complete fee breakdown before signing.
How does a trade-in affect my loan?
Your trade-in's value is applied as a credit toward your new vehicle purchase, reducing the amount you need to finance. If you owe more on your trade-in than it's worth (negative equity), that shortfall is added to your new loan - increasing your loan amount, monthly payment, and risk. Always get the trade-in value appraised separately (KBB, Edmunds, CarMax) before negotiating with the dealer, so you know exactly what you should receive.