About

Miscalculating an auto loan costs borrowers an average of $1,200 - $3,500 in excess interest over the life of a typical 60-month term. The root cause is usually ignoring the compounding effect: a 1% rate difference on a $35,000 loan shifts total cost by roughly $900. This calculator applies the standard fixed-rate amortization formula used by banks and credit unions, factoring in down payment, trade-in value, sales tax, and dealer fees. It produces an exact month-by-month amortization schedule showing the split between principal P and interest I for every payment. Note: the model assumes fixed APR with no prepayment penalties and does not account for variable-rate structures or balloon payments.

Formulas

The fixed-rate auto loan monthly payment is derived from the ordinary annuity present value formula:

M = P × r⋅(1 + r)ⁿ(1 + r)ⁿ − 1

Where M = monthly payment, P = loan principal (amount financed), r = monthly interest rate (annual APR ÷ 12), and n = total number of monthly payments.

The loan principal is computed as:

P = (V − D − T) × (1 + t) + F

Where V = vehicle price, D = down payment, T = trade-in value, t = sales tax rate (as decimal), and F = additional fees (title, registration, dealer fees).

For each payment period k, the interest portion equals:

I_k = B_k−1 × r

The principal portion: P_k = M − I_k. The remaining balance: B_k = B_k−1 − P_k. When APR = 0%, the formula simplifies to M = P ÷ n.

Reference Data

Loan Term	Typical APR Range (New)	Typical APR Range (Used)	Monthly Payment per $25,000	Total Interest Paid	Notes
24 mo	4.5 - 6.0%	5.5 - 8.0%	$1,092	$1,208	Lowest total cost
36 mo	4.8 - 6.5%	5.8 - 8.5%	$742	$1,825	Good balance
48 mo	5.0 - 7.0%	6.0 - 9.0%	$575	$2,460	Common for new cars
60 mo	5.2 - 7.5%	6.5 - 9.5%	$474	$3,115	Most popular term
72 mo	5.5 - 8.0%	7.0 - 10.5%	$409	$3,790	Negative equity risk
84 mo	6.0 - 9.0%	7.5 - 11.0%	$363	$4,488	High total cost
Credit Score Impact on APR (New Vehicle, 60-mo term)
Superprime	781 - 850		3.6 - 5.0%		Best rates
Prime	661 - 780		5.0 - 7.5%		Standard approval
Nonprime	601 - 660		7.5 - 11.0%		Higher down payment helps
Subprime	501 - 600		11.0 - 15.0%		Consider shorter term
Deep Subprime	300 - 500		15.0 - 20.0%		Rebuilding credit advised
Average Sales Tax by State (Select)
California	7.25% base		Texas	6.25%
Florida	6.00%		New York	4.00% + local
Illinois	6.25%		Pennsylvania	6.00%
Ohio	5.75%		Michigan	6.00%
Oregon	0.00%		Montana	0.00%

Frequently Asked Questions

Extending from 48 to 72 months on a $30,000 loan at 6.5% APR increases total interest from approximately $4,188 to $6,426 - a 53% increase. The monthly payment drops by about $155, but you pay $2,238 more over the life of the loan. Longer terms also increase the window during which your loan balance exceeds the vehicle's depreciated value (negative equity).

This varies by jurisdiction. In most U.S. states (roughly 42 of 50), sales tax applies only to the difference between the purchase price and trade-in value. However, states like California, Hawaii, and the District of Columbia tax the full purchase price regardless of trade-in. This calculator applies tax to the net amount (price minus trade-in) by default. Check your state's motor vehicle department for the exact rule.

LTV equals the financed amount divided by the vehicle's market value, expressed as a percentage. Lenders typically cap auto loan LTV at 100 - 125% for new vehicles. An LTV above 100% means you owe more than the car is worth. If the vehicle is totaled or stolen, insurance pays market value, not your loan balance - leaving you responsible for the gap. A down payment of at least 20% keeps LTV manageable and often secures better APR.

Dealers often offer either 0% financing or a cash rebate (e.g., $2,500 off). The break-even depends on the alternative rate you'd get. For a $30,000 loan over 60 months: 0% APR saves you about $4,050 in interest versus a 5.2% rate. If the rebate is less than that interest savings, take the 0% financing. Use this calculator with both scenarios to compare total costs.

The current model computes the standard amortization schedule assuming fixed monthly payments with no prepayment. To estimate the effect of extra payments, reduce the principal by the extra amount you plan to pay and shorten the term accordingly. Most auto loans in the U.S. have no prepayment penalty, but verify with your lender. Even $50 extra per month on a 60-month, $25,000 loan at 6% saves roughly $400 in interest and retires the loan 6 months early.

Common fees rolled into auto loans include: title and registration ($75 - $500), dealer documentation fee ($100 - $800), and optional add-ons like GAP insurance or extended warranty. Each dollar of fees added to the loan accrues interest over the full term. On a 60-month loan at 6%, a $500 fee actually costs $580 by loan end. Enter total anticipated fees in the dedicated field.