Before-you-sign calculator
Auto Loan Calculator
See the true cost of the loan, not just the monthly payment.
Dealer financing can make a long loan term feel affordable while quietly adding thousands in interest. This calculator helps you compare the tradeoff before you agree to the note.
Loan Details
Check your loan offer or credit union rate.
How Auto Loan Interest Works
Auto loans use simple interest amortisation. That means every month, you pay interest on the remaining balance — so early payments are mostly interest, and later payments are mostly principal.
The formula for your monthly payment is: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate, and n is the number of payments.
Longer term = lower payment, more interest
A 72-month loan has a lower payment than a 48-month loan on the same amount, but you'll pay significantly more interest total. Run both scenarios to see the trade-off.
What to Watch Out For
- Down payment matters: A bigger down payment reduces your principal, your monthly payment, and total interest.
- Compare financing sources: Dealer rates are not always the cheapest option. Check a credit union or bank too.
- Gap insurance and add-ons: These get rolled into the loan amount by dealers. Make sure your loan amount reflects the actual purchase price.
- Estimates only: Actual lender terms, fees, and payoff amounts may differ.
Frequently Asked Questions
How is my monthly car payment calculated?
Your monthly payment uses the standard loan amortisation formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is your loan amount, r is your monthly interest rate (APR ÷ 12), and n is the number of months. This is the same formula all lenders use.
What is a good interest rate for a car loan?
As of 2024–2025, good credit borrowers (700+ score) typically see rates of 5–7% for new cars and 7–10% for used cars. Rates below 4% are excellent. Above 15% usually means higher-risk credit — consider improving your score or saving a larger down payment first.
Is a longer loan term better?
A longer term (e.g., 72 or 84 months) gives you a lower monthly payment, but you pay significantly more interest total and risk going 'underwater' — owing more than the car is worth. A 48–60 month term is generally the sweet spot.
Should I put a down payment on a car?
Yes, if you can. A larger down payment means a smaller loan, lower monthly payment, and less total interest. It also reduces the risk of being upside-down on the loan. Aim for at least 10–20% down.
Can I pay off a car loan early?
Most auto loans have no prepayment penalty, so you can pay extra or pay it off entirely whenever you want. Every extra dollar of principal you pay reduces future interest charges. Check your loan agreement to confirm there's no prepayment fee.
What's the difference between APR and interest rate on a car loan?
The interest rate is the base cost of borrowing. APR (Annual Percentage Rate) includes the interest rate plus any fees, making it a more complete picture of the loan's true cost. For auto loans, these are often the same or very close — but always compare APR when shopping rates.