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Last updated: December 21, 2023

Auto Loan Calculator

Determine your monthly loan payments with our free auto loan calculator.

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Estimate Your Monthly Auto Loan Payment

To estimate your monthly car loan payments, enter the purchase price of the vehicle, how much you’ll put down, trade-in value if applicable, and any cash rebate. Our auto loan calculator will estimate your monthly payments and how much interest you’ll pay over the life of the loan.

What to Know About Auto Financing

Most people can’t pay in cash for a vehicle, so they apply for a car loan from a financial institution, such as a bank, credit union, or dealership-affiliated lender. Upon approval, the borrower receives the vehicle while committing to make monthly payments over a specified loan term, typically ranging from 24 to 84 months.

The interest rate, determined by factors like credit score and economic conditions, adds to the loan amount, affecting the overall cost. Longer loan terms may result in lower monthly payments but higher total interest.

Factors that affect your auto loan payments

Credit Score

Your credit score is a major factor in determining your interest rate. The table below will give you a sense of the interest rate you might get on your loan, depending on whether you buy a new or used car.1

Credit Score Average Interest Rate: New Cars Average Interest Rate: Used Cars
781-850 5.18% 6.79%
661-780 6.40% 8.75%
601-660 8.86% 13.28%
501-600 11.53% 18.55%
300-500 14.08% 21.32%

TIP:

If your credit score is 600 or lower, we can help you find the best auto loans for bad credit.

New vs. Used Car

Your monthly payments will likely be lower for a used than new car. Even though used cars come with higher interest rates than new cars, the difference in vehicle price usually translates into lower monthly payments. The average monthly payment in the U.S. for a used car loan is $569, which is 22 percent below the $733 average new car monthly payment.2

In the long-term, it’s typically less expensive to own a used car, though it depends on the vehicle’s condition. Brands known to hold their value over time, like Toyota or Honda, will depreciate less quickly than other vehicles, like luxury cars.

Down Payment

The higher your down payment, the lower your monthly auto loan payments. If you’re trading in a vehicle, you can put its value toward the down payment. When you put more down, you also lower the amount of total interest you’ll pay over the life of the loan.

For example, let’s say you’re purchasing a $20,000 vehicle at a 10 percent interest rate, with a 60-month loan term:

Down Payment Down Payment Amount Monthly Payment
(10% APR, 60-month loan term)
Total Interest Paid Over Life of the Loan
0% $0 $425 $5,496
10% $2,000 $382 $4,947
20% $4,000 $340 $4,397

Loan Term

The loan term is the amount of time it will take you to pay back the loan, usually two to seven years. Shorter loan terms mean higher monthly payments, but less interest paid overall. Longer loan terms will lower your monthly payments, but you’ll pay more in interest.

For example, if you’re borrowing $18,000 at a 10 percent interest rate, here is how your monthly payments and total interest paid would change based on the loan term:

Monthly Loan Term Monthly Payment Total Interest Paid
24 $831 $1,935
36 $581 $2,909
48 $457 $3,913
60 $382 $4,947
72 $333 $6,009
84 $299 $7,101

LEARN MORE:

Compare our top picks for the best 72-month auto loan rates.

Buying vs. Leasing

Buying a car typically involves paying more upfront and higher monthly payments than leasing. Leasing allows you to drive a new vehicle with lower initial costs and monthly payments. In the long run, buying generally saves you money compared to leasing, because eventually you own the vehicle and no longer have to make monthly payments. Our Lease vs. Buy Calculator can assist in making an informed decision.

Auto Loan Tips

Save for a Down Payment

To reduce the total amount you have to finance, have a down payment saved up. We recommend at least 20 percent, but even 10 percent can make a difference in lowering your interest payments.

Prepare for Additional Costs

The final price you pay will be higher than the sticker on the car window. Factor in expenses such as taxes, title fees, and future vehicle maintenance when calculating vehicle cost. If you’re not sure how much you can afford, our Car Affordability Calculator can help.

Consider Refinancing Your Current Car Loan

Refinancing your current loan can be a great option to save money while keeping your vehicle. If your credit has improved, explore this option to lower your monthly payment and/or pay less interest overall. Check out our Auto Refinance Calculator to get a better sense of whether refinancing is worth it.

Opt for a Shorter Loan Term

The shorter your loan term is, the higher your monthly payments will be — but the less you’ll pay in interest overall. Opt for the shortest loan length whose monthly payments fit comfortably in your budget. Financial experts recommend loan terms of no more than 48 to 60 months for new cars, and 36 to 48 months for used cars. Longer than that, and you could end up with negative equity (owing more on the car than it’s worth). If your monthly payments for a particular vehicle are too high for a loan term in that range, consider a less expensive vehicle.

Shop Around

Just as comparing quotes from different auto insurance providers will help you find the lowest rates, comparing loans from different lenders can help you find the best loan. Shop around with three to five lenders, such as credit unions, banks, and automakers.

GOOD TO KNOW:

Before you purchase a used car, get a pre-purchase inspection from a mechanic to check for maintenance issues that could be costly to repair.

Auto Loan FAQ

What is the difference between direct lending and dealership financing?

Direct lending involves obtaining a loan from a bank or credit union before visiting a dealership, providing more flexibility in negotiating terms. Dealership financing, on the other hand, is arranged after negotiating a vehicle purchase at the dealership. The best new car loans often come from lenders other than the dealership. We recommend getting pre-approved on a loan before visiting a dealership to have a better understanding of available financing options. Our Dealer vs. Bank Financing Calculator can help you determine the best option for you.

How can I maximize my trade-in?

The trade-in value is the amount a dealership is willing to pay for your current vehicle when purchasing a new one. Cleaning the vehicle, making minor repairs, obtaining multiple offers, and negotiating with the dealership can help maximize the trade-in value. The higher your trade-in value, the lower your monthly auto loan payments.

Should I buy new or used?

Buying a new car offers the latest features, a warranty, and often lower interest rates. However, it comes with a higher price tag, quicker depreciation, and costlier insurance. Purchasing a used car typically means a lower upfront cost, slower depreciation, and potentially lower insurance rates — though a higher interest rate on the loan. Typically, your monthly loan payments will be lower for a used car.

Consider your budget, desired features, and the trade-off between upfront cost and long-term value when deciding between a new or used car.

Can I pay off a car loan early?

You can often pay off a car loan early without penalties, but make sure to check the loan terms, as some agreements may have prepayment penalties. Paying more than the minimum can help reduce overall interest payments. Getting ahead on your loan payments can also benefit you if you lose your source of income or unexpected expenses can come up, as you may be able to pause your car payments if you’re ahead (keep in mind you’ll still accrue interest).

What are auto loan rebates?

An auto loan rebate reduces the purchase price of the vehicle by hundreds or sometimes thousands of dollars. Typically, the dealership applies the rebate toward the down payment, but sometimes it reduces the actual price of the car, which will also save you money in taxes.

Sometimes, dealerships offer you the option between a rebate and a 0 percent loan (often for a specific loan term). It’s usually harder to qualify for the 0 percent loan than the rebate. To determine whether it makes more sense to take the rebate or the 0 percent loan, use the auto loan calculator to compare your monthly payments and total interest paid for each. If you can afford the monthly payments and the interest you’ll save is more than the rebate value, you’re likely better off taking the 0 percent loan.

Citations

  1. What Is a Good Auto Loan Interest Rate? Experian. (2023, Jun 23).
    https://www.experian.com/blogs/ask-experian/what-is-good-auto-loan-interest-rate/

  2. Car Shoppers Feel the Heat from Scorching Financing Costs in Q2, According to Edmunds. Edmunds. (2023, Jul 3).
    https://www.edmunds.com/industry/press/car-shoppers-feel-the-heat-from-scorching-financing-costs-in-q2-according-to-edmunds.html