# Auto loan calculator

Are you shopping for a new or used car? Use our car loan calculator to see what your monthly payment might look like and how much interest you would pay over the life of the loan.

## Auto loan payment calculator results explained

To use the car loan calculator, enter a few loan details, including:

**Vehicle cost:**The amount you want to borrow to buy the car. If you plan to make a down payment or trade-in, subtract that amount from the price of the car to determine the loan amount.**Term:**The time you have to repay the loan. In general, the longer the term, the lower your monthly payment, but the more interest you will pay overall. On the other hand, the shorter the term, the higher your monthly payment and the less interest you will pay.**New / Used:**Whether the car you want to buy is new or used. If you don’t know the interest rate, it can help you figure out what rate you’ll get (interest rates tend to be higher for used cars).**Interest rate:**The cost of borrowing, expressed as a percentage of the loan.

Once you enter the details, the auto loan payment calculator automatically displays the results, including dollar amounts for:

**Total monthly payment:**The amount that you will pay each month during the term of the loan. A portion of each monthly payment is used to repay principal and a portion is applied to interest.**Total capital paid:**The total amount you will borrow to buy the car.**Total interest paid:**The total amount of interest you will have paid during the term of the loan. In general, the longer you take to repay the loan, the more interest you pay overall. Add the total principal paid and the total interest paid to see the total overall cost of the car.

Use the auto loan calculator *before* you head to the parking lot to be ready to find a car that fits your budget and negotiate the best deal.

## How is interest calculated on a car loan?

An auto loan calculator shows the total amount of interest you will pay over the life of a loan. If the calculator offers a Amortization schedule, you can see how much interest you will pay each month. With most auto loans, part of each payment goes towards principal (the amount you borrow) and part towards interest.

The interest you pay each month is based on the current loan balance. So in the early days of the loan, when the balance is higher, you pay more interest. As you pay off the balance over time, the interest portion of the monthly payments goes down.

You can use the auto loan calculator to figure out how much interest you owe, or you can do it yourself if you’re ready for a little math. Here is the standard formula for calculating the monthly interest on your car loan by hand:

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interest rate

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text {Monthly interest} = bigg ( frac { text {interest rate}} {12} bigg) times text {loan balance}

Monthly interest=(12interest rate)×loan balance

Here’s an example, based on a balance of $ 30,000 with an interest rate of 6%:

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0

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6

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3

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Monthly interest

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begin {gathered} = bigg ( frac {0.06} {12} bigg) times $ 30,000 = 0.005 times $ 30,000 text {Monthly interest} = $ 150 end {gathered}

=(120.06)×$30,000=0.005×$30,000Monthly interest=$150

To convert a percentage to a decimal, divide the percentage by 100 and remove the percent sign. For example, 6% becomes the decimal 0.06 (6 ÷ 100 = 0.06).

## What is a good APR for a car loan?

Interest on an auto loan can dramatically increase the total cost of the car. For example, the interest on a $ 30,000 36 month loan at 6% is $ 2,856. The same loan ($ 30,000 at 6%) repaid over 72 months would cost $ 5,797 in interest.

Of course, even small changes in your rate have an impact on the overall amount of interest you pay. The interest on a 72-month, $ 30,000 loan at 5% is $ 4,787, a savings of over $ 1,000 compared to the same loan at 6%.

So that pays to shop for the best possible rate. While interest rates vary by lender, your rate also depends on other factors, including:

**Federal Reserve Interest Rate:**When the fed keeps interest rates low, you pay less to borrow money.**Your credit score:**In general, the better your credit, the lower your interest rate.**Your debt ratio (DTI):**Your DTI shows how much of your gross monthly income is spent on paying off your monthly debts. The lower your DTI, the lower your interest rate will be.**Type of loan:**Used car loans have higher rates than new car loans (because used cars have lower resale value).**The duration of the loan:**Longer loan terms usually have higher interest rates.

So what is a good APR for a car loan? The best way to answer is to look at the averages. Here are the average new and used car loan rates by credit score, according to Experian Report on the state of the automotive finance market in the second quarter of 2020 (the most recent data available):

Average New and Used Car Loan Rates by Credit Score | |||
---|---|---|---|

Credit score level | Credit score range | Average price of new cars | Average used car price |

Deep subprime | 300 – 500 | 13.97% | 20.67% |

Subprime | 501 – 600 | 11.33% | 17.78% |

Nonprime | 601 – 660 | 7.14% | 11.41% |

First | 661 – 780 | 4.21% | 6.05% |

Super Prime | 781 – 850 | 3.24% | 4.08% |

In general, a “good” rate is one that is equal to or, ideally, lower than your average credit score. Here’s a look at what those averages would cost over the life of a five-year $ 30,000 loan:

How much is $ 30,000 over 5 years | ||||
---|---|---|---|---|

Credit score range | Average price of new cars | Total interest | Average used car price | Total interest |

300 – 500 | 13.97% | $ 11,855 | 20.67% | $ 18,363 |

501 – 600 | 11.33% | $ 9,433 | 17.78% | $ 15,493 |

601 – 660 | 7.14% | $ 5,761 | 11.41% | $ 9,505 |

661 – 780 | 4.21% | $ 3,321 | 6.05% | $ 4,841 |

781 – 850 | 3.24% | $ 2,536 | 4.08% | $ 3,215 |

## How can I calculate the payment for my car?

Our loan calculator shows how much a loan will cost you each month and how much interest you will pay in total. It can be helpful to use the calculator to try out different scenarios to find a loan that matches your monthly budget and the total amount of interest you’re willing to pay.

The best way to get a lower auto loan interest rate is to improve your credit score. If your credit score is low, consider delaying buying a car (if possible) until you can improve your score.

To manually calculate your monthly car loan payment, divide the total loan amount and interest by the loan term (the number of months you have to pay off the loan). For example, the total interest on a $ 30,000 60 month loan at 4% would be $ 3,150. So your monthly payment would be $ 552.50 ($ 30,000 + $ 3,150 ÷ 60 = $ 552.50).

If you’ve frozen three-month payments on a loan due to financial hardship with COVID-19, your subsequent repayments might be slightly higher to compensate.

The longer you take to pay off a loan, the more interest you’ll pay overall and you’ll likely have a higher interest rate as well. Make a down payment, if possible, and aim for the shortest possible loan term with a monthly payment that you can still afford. And keep in mind that a car incurs expenses beyond the loan payment. Make sure you have money left over to pay car insurance, gas, parking, maintenance, etc. –Jean Folger