Planning to buy a car? Enter the amount you’ll finance (vehicle price minus your down payment and trade-in), your quoted APR, and the loan term to see your monthly payment, total interest cost and a complete amortization schedule.
How Car Payments Are Calculated
Auto loans use the same amortization formula as mortgages: P is the amount financed, r the monthly rate, n the number of payments. Taxes, title and dealer fees are often rolled into the amount financed — include them in the loan amount for an accurate figure.
Worked Example
Financing $35,000 at 7% APR over 6 years gives a monthly payment of about $597, and roughly $7,960 in total interest. The same loan over 4 years costs about $838 per month — but cuts total interest to around $5,200.
Tips Before You Sign
Get pre-approved by a bank or credit union before visiting the dealer so you can compare against dealer financing. Focus on the total cost, not the monthly payment — dealers can make almost any payment “fit” by stretching the term. And keep the loan term at or below how long you plan to keep the car.
Frequently Asked Questions
Should I finance a car for 72 or 84 months?
Longer terms lower the payment but cost far more in interest and increase the risk of owing more than the car is worth. Many experts suggest 60 months or less if the payment fits your budget.
How does a down payment change my auto loan?
Every dollar of down payment reduces the amount financed, lowering the monthly payment and total interest — and protecting you against negative equity as the car depreciates.
What APR should I expect on a car loan?
Rates vary widely with credit score, term and vehicle age. Get real quotes from multiple lenders and plug your actual APR into the calculator above.