Financial Calculators
Auto Loan Calculator
Calculate your monthly car payment, total interest, and true cost of ownership - including down payment, trade-in, and sales tax. Free, private, works offline.
Fill in the fields above and click Calculate to see your results.
How auto loan financing works
When you finance a car, a lender pays the dealer and you repay the lender in monthly installments over the loan term. Each payment covers that month's interest plus a portion of the principal. The monthly payment formula is:
M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments.
Your loan amount equals the vehicle price plus sales tax, minus your down payment, minus any trade-in credit. A larger down payment or trade-in directly reduces the amount you finance and the total interest you pay.
Should I take dealer financing or a bank loan?
Dealers often advertise special manufacturer financing rates (0% APR promotions, for example) that can be genuinely excellent, but only for buyers with strong credit. In other cases, dealer finance rates are marked up above the rate the bank actually quotes, because the dealer earns a commission on the spread.
The safest approach: get pre-approved by your bank or credit union before visiting the dealership. Use that rate as your baseline. If the dealer can beat it, take the dealer offer; if not, use your pre-approval.
How loan term affects total cost
| Loan amount | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $25,000 | 6.9% | 36 mo | $771 | $2,756 |
| $25,000 | 6.9% | 48 mo | $596 | $3,618 |
| $25,000 | 6.9% | 60 mo | $493 | $4,548 |
| $25,000 | 6.9% | 72 mo | $425 | $5,555 |
As the table shows, stretching to 72 months saves $68/month vs. 60 months, but costs $1,000 more in total interest. A longer term also means the car depreciates faster than you pay down principal, which can leave you underwater.
Total cost of ownership
The sticker price and loan payment are only part of the true cost of owning a vehicle. Consider these additional ongoing expenses:
- Insurance: Varies widely by age, location, driving record, and vehicle. Full coverage on a new car typically costs $1,500–$3,000/year.
- Fuel: At 15,000 miles/year and $3.50/gallon, a 30 MPG car costs ~$1,750 in fuel annually; a 20 MPG truck costs ~$2,625.
- Maintenance: Budget ~$500–$1,000/year for routine maintenance (oil changes, tires, brakes). Older vehicles may cost more.
- Depreciation: A new car loses ~20% of its value in the first year and ~50% over five years. This is the largest single ownership cost for most buyers.
- Registration and taxes: Annual registration fees and property taxes vary by state, often $200–$600/year.
Down payment strategy
A 20% down payment is the traditional recommendation for a new car purchase. This reduces your monthly payment and, importantly, keeps your loan balance below the car's actual value from day one. A new car depreciates by roughly 10–20% the moment it leaves the lot. Without a meaningful down payment, you are immediately underwater (owing more than the car is worth), which creates financial risk if the car is totaled or you need to sell.
GAP insurance
GAP (Guaranteed Asset Protection) insurance covers the difference between your loan payoff amount and the actual cash value of the car if it is totaled or stolen. It is most relevant when you:
- Made a small or no down payment (loan balance exceeds car value)
- Took a long-term loan (72–84 months), where early payments cover mostly interest
- Purchased a vehicle known for rapid depreciation
GAP insurance purchased through a dealer is often overpriced ($400–$800). Many auto insurers offer standalone GAP coverage for $20–30/year added to your comprehensive policy.