How the auto loan calculator works
Your loan amount is the vehicle price minus your down payment and any trade-in value. The calculator applies the standard amortization formula with your interest rate and term to find a fixed monthly payment, then shows the total interest and overall cost of the car loan.
The formula it uses
M = L × [ r(1+r)n ] ÷ [ (1+r)n − 1 ]
L is the loan amount (price − down payment − trade-in), r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. Car terms are usually quoted in months (60, 72, 84), so enter the term directly in months.
Worked example
A $30,000 car with $5,000 down, no trade-in, at 7.5% over 60 months:
- Loan amount: $30,000 − $5,000 = $25,000
- Monthly payment: ≈ $501
- Total interest: ≈ $5,057
- Total cost of the loan: ≈ $30,057
Why a longer term can backfire
Stretch the same $25,000 loan to 72 months and the payment drops to about $432 — tempting — but total interest climbs to roughly $6,122, about $1,065 more. Longer terms also raise the risk of negative equity: owing more than the car is worth while it depreciates.
Key terms
Trade-in value — what the dealer credits for your old car, reducing the loan. Down payment — cash paid upfront. Negative equity / underwater — owing more than the car's value. APR — the rate including fees, the fairest way to compare offers. Depreciation — the loss in a car's value over time.
Common mistakes to avoid
Focusing only on the monthly payment instead of the total cost. Rolling negative equity from an old loan into the new one. Accepting dealer financing without comparing a bank or credit union rate. Forgetting that tax, registration, and add-ons aren't in this estimate unless you add them to the price.
Frequently asked questions
What loan term should I choose?
Shorter terms (36-48 months) cost less interest; longer terms (72-84 months) lower the monthly payment but cost more overall and risk negative equity.
Are taxes and fees included?
No. Add sales tax, registration, and dealer fees to the vehicle price if you plan to finance them.
Does a bigger down payment help?
Yes. A larger down payment or trade-in shrinks the loan, lowering both the payment and total interest.
What is negative equity?
Owing more than the car is worth. Long terms and small down payments make it more likely because cars depreciate quickly.
Does my credit score affect the rate?
Strongly. A higher score usually earns a much lower rate, saving thousands over the loan.
Dealer financing or a bank loan?
Compare both on APR. Getting pre-approved by a bank or credit union gives you a benchmark before the dealership.
Can I pay it off early?
Usually yes, and it saves interest. Check whether your contract has a prepayment penalty.
Is my data saved?
No. Everything runs in your browser; nothing is uploaded.