Estimate your monthly car loan payments with our free auto loan calculator. Adjust loan amount, interest rate, and term to find the perfect payment plan for your budget.
Loan Summary
Amortization Schedule
Understanding Auto Loans: A Comprehensive Guide
How to Use Our Auto Loan Calculator
Our auto loan calculator helps you estimate monthly payments and total loan costs before visiting the dealership. Simply enter:
- Vehicle Price: The total cost of the car before any discounts
- Down Payment: The amount you’ll pay upfront
- Trade-in Value: The value of your current vehicle if trading in
- Interest Rate: The annual percentage rate (APR) of your loan
- Loan Term: The length of the loan in months (typically 36-72 months)
- Sales Tax: Your local sales tax rate
- Fees: Any additional fees (registration, documentation, etc.)
Factors Affecting Your Auto Loan
Several key factors influence your auto loan terms and monthly payments:
1. Credit Score Impact
Your credit score significantly affects the interest rate you qualify for. Borrowers with excellent credit (720+) typically receive rates 3-5% lower than those with poor credit (below 600). Improving your credit score before applying can save thousands over the loan term.
2. Loan Term Considerations
While longer terms (72-84 months) offer lower monthly payments, they result in higher total interest costs. Shorter terms (36-48 months) save money overall but require higher monthly payments.
3. Down Payment Strategies
A larger down payment reduces your loan amount, monthly payments, and interest costs. Experts recommend at least 20% down for new vehicles and 10% for used cars to avoid negative equity.
Current Auto Loan Rates and Trends
As of 2023, average auto loan rates are:
- New cars: 4.5%-6.5% APR for borrowers with good credit
- Used cars: 5.5%-8.5% APR for borrowers with good credit
- Subprime borrowers: 10%-20% APR depending on credit history
Tips for Getting the Best Auto Loan
- Shop around: Compare rates from banks, credit unions, and online lenders
- Get pre-approved: Secure financing before visiting dealerships
- Consider shorter terms: Opt for the shortest term you can afford
- Watch for fees: Avoid loans with excessive origination or prepayment fees
- Time your purchase: End-of-month or year-end sales often have better financing deals
Frequently Asked Questions
Q: How much car can I afford?
A: Financial experts recommend keeping total vehicle expenses (loan payment, insurance, maintenance) below 15-20% of your monthly take-home pay.
Q: Should I finance through the dealership or a bank?
A: Dealership financing can be convenient, but banks and credit unions often offer lower rates. Get quotes from both before deciding.
Q: How does refinancing an auto loan work?
A: Refinancing replaces your current loan with a new one at a lower rate, potentially reducing payments or shortening your term.
Q: What’s the difference between simple interest and precomputed interest loans?
A: Simple interest loans calculate interest based on the current balance (saving money if you pay early), while precomputed loans calculate total interest upfront.