Car Loan Calculator

Understanding Auto Loan Payments

When financing a vehicle, your monthly payment depends on several factors: the car's price, your down payment, any trade-in value, the interest rate (APR), and the loan term length. This calculator helps you understand the true cost of financing a vehicle by breaking down all components.

By adjusting these variables, you can see how different loan scenarios affect your monthly payment and total cost, helping you make an informed decision about your vehicle purchase.

Key Auto Loan Terms

• Car Price (MSRP): The manufacturer's suggested retail price or negotiated price of the vehicle.
• Down Payment: The upfront amount you pay, reducing the loan amount (typically 10-20% of car price).
• Trade-In Value: Credit applied from your current vehicle toward the new car purchase.
• APR (Annual Percentage Rate): The yearly interest rate charged on the loan.
• Loan Term: The length of time to repay the loan (typically 36-72 months).
• Sales Tax: State/local tax applied to the vehicle purchase (varies by location).

Tips for Better Car Loan Terms

• Larger Down Payment: Putting down 20% or more reduces your loan amount and may qualify you for better rates.
• Shorter Loan Term: While monthly payments are higher, you'll pay significantly less interest over time.
• Shop for Rates: Compare offers from banks, credit unions, and the dealer to find the best APR.
• Improve Credit Score: A higher credit score typically qualifies you for lower interest rates.
• Negotiate Price: Lowering the vehicle price saves more money than negotiating loan terms alone.
• Consider Total Cost: Focus on the total amount paid, not just the monthly payment.

Common Car Loan Mistakes to Avoid

• Focusing only on monthly payment instead of total loan cost
• Choosing a loan term that's too long (72+ months), leading to being "underwater" on the loan
• Not getting pre-approved before shopping, which weakens negotiating position
• Rolling negative equity from a trade-in into the new loan
• Skipping gap insurance on a loan with low down payment
• Not reading the fine print for additional fees and charges

Down Payment vs Loan Term Comparison

Example for a $30,000 car at 6% APR:

Note: Higher down payments and shorter terms save thousands in interest.

Getting Pre-Approved

Before shopping for a car, consider getting pre-approved for an auto loan from your bank or credit union. Pre-approval gives you:

• A clear budget for your car purchase
• Stronger negotiating power at the dealership
• Knowledge of your actual interest rate
• The ability to shop with confidence like a cash buyer