About

Financing a vehicle is often the second largest purchase a person makes. This calculator goes beyond simple monthly payment estimation by revealing the true cost of borrowing. Auto loans use compound interest formulas that can hide the long-term impact of high interest rates or extended loan terms (e.g., 72 or 84 months).

Use this tool to compare scenarios: see how increasing your down payment affects your monthly burden, or check how much money you save on interest by making an extra contribution toward the principal every month.

Formulas

We use the standard amortization formula to determine the monthly payment required to pay off the loan balance.

M = P × r(1+r)ⁿ(1+r)ⁿ − 1

Where:

M = Monthly Payment
P = Principal Loan Amount
r = Monthly Interest Rate (Annual Rate ÷ 12)
n = Total Number of Months

Reference Data

Credit Score	Avg. New Car Rate	Avg. Used Car Rate
Super Prime (781-850)	~5.6%	~7.4%
Prime (661-780)	~6.9%	~9.3%
Non-Prime (601-660)	~9.3%	~13.5%
Subprime (501-600)	~11.9%	~18.4%
Deep Subprime (300-500)	~14.8%	~21.6%

Frequently Asked Questions

You should add sales tax and dealer fees to the 'Vehicle Price' field for the most accurate result. Financing these fees increases your loan principal and the interest you pay.

Car loans charge interest on the remaining balance. By paying extra, you reduce the principal faster. This means less interest accrues in subsequent months, allowing you to pay off the car earlier and save potentially thousands of dollars.

Financial experts recommend 36 to 60 months. While 72 or 84-month loans offer lower monthly payments, you end up paying significantly more in total interest, and you risk being 'upside down' (owing more than the car is worth) for a longer period.