How to Use the Car Loan Calculator

This car loan calculator helps you understand the true cost of financing a vehicle. Enter your car price, down payment, trade-in value, interest rate, and loan term to instantly see your monthly payment, total interest, and complete cost breakdown. The calculator includes sales tax and fees to give you an accurate picture of what you'll actually pay.

Understanding Your Results

• Monthly Payment: Your fixed monthly payment amount including principal and interest. This stays the same throughout your loan term, but the breakdown between principal and interest changes each month.
• Loan Amount: Total amount being financed after subtracting your down payment and trade-in value from the car price (plus taxes and fees).
• Total Payment: Sum of all monthly payments over the entire loan term. This is your loan amount plus total interest.
• Total Interest: Extra amount paid beyond the loan principal. This is the cost of borrowing money. Early payments are mostly interest, later payments are mostly principal.
• Total Cost: Complete cost including down payment, all monthly payments, and accounting for trade-in value. This is what the car actually costs you.
• Amortization Schedule: Month-by-month breakdown showing how each payment is split between principal and interest, and your remaining balance. Early payments are mostly interest, later payments build equity faster.

Tips for Getting the Best Car Loan

• Check Your Credit Score: Know your credit score before shopping. Scores of 740+ get the best rates. Improve your score if needed by paying bills on time and reducing debt.
• Shop Multiple Lenders: Get quotes from banks, credit unions, online lenders, and dealerships. Compare APRs, not just monthly payments. Rate shopping within 14-45 days counts as one credit inquiry.
• Get Pre-Approved: Pre-approval gives you negotiating power and shows dealers you're serious. It also helps you stay within budget.
• Make a Larger Down Payment: Aim for 20% down payment minimum. This reduces your loan amount, monthly payment, total interest, and helps avoid negative equity.
• Choose Shorter Loan Terms: 48 months or less is ideal. While 60-72 month loans have lower monthly payments, you pay significantly more interest and risk owing more than the car's value.
• Negotiate Car Price Separately: Negotiate the car price first, then discuss financing. Don't let dealers bundle price and financing together - it makes it harder to see the true cost.
• Consider Total Cost: Don't just focus on monthly payment. A longer loan term may have lower payments but costs thousands more in interest. Use this calculator to see the true total cost.
• Avoid Negative Equity: Don't roll negative equity from your old car into a new loan. Pay it off first or sell privately to get more value.
• Read All Loan Terms: Understand all fees, prepayment penalties, and loan terms before signing. Ask questions if anything is unclear.
• Consider Refinancing: If interest rates drop or your credit improves, consider refinancing to save money. Check for prepayment penalties first.

Car Loan Formula

This formula calculates your fixed monthly payment. Early payments are mostly interest because you're paying interest on the full loan balance. As you pay down principal, less of each payment goes to interest and more goes to principal. This is why building equity takes time - in the first year, you might only pay down 15-20% of your loan amount, even though you've made 12 payments.