Car Loan Calculator

A car loan calculator is a financial tool that helps you estimate monthly car payments, total interest costs, and complete ownership expenses. It factors in vehicle price, down payment, trade-in value, interest rate, loan term, taxes, fees, insurance, maintenance, and fuel costs to provide a comprehensive view of car financing and ownership costs.

Monthly car payment is calculated using the formula: Payment = P × r × (1 + r)^n / ((1 + r)^n - 1), where P is the loan amount (vehicle price - down payment - trade-in + taxes + fees), r is the monthly interest rate (annual rate / 12), and n is the number of monthly payments (loan term in years × 12).

A good interest rate depends on your credit score and vehicle type. For new cars with excellent credit (750+), rates of 3-5% are good. Used cars typically have rates 1-2% higher. Rates below 4% for new cars and below 6% for used cars are considered excellent. Always shop around and compare offers from multiple lenders.

Trading in is convenient and may reduce sales tax on your new purchase, but you'll typically receive less than private sale value. Selling privately requires more effort but can potentially net you more money. Consider your time, effort, and the convenience factor when deciding. The actual difference varies by vehicle condition, market demand, and local factors. Use our calculator to see how different trade-in values affect your loan.

A 4-5 year (48-60 month) loan term is ideal for most buyers, balancing affordable monthly payments with reasonable total interest costs. Shorter terms (36 months) save significantly on interest but have higher monthly payments. Longer terms (72-84 months) lower monthly payments but cost thousands more in interest and increase the risk of negative equity.

Your credit score significantly impacts your interest rate. Excellent credit (750+) qualifies for rates around 3-5%, good credit (700-749) gets 5-7%, fair credit (650-699) gets 7-10%, and poor credit (below 650) may see rates above 10%. Improving your credit score by even 50 points before applying can save thousands in interest over the loan term.

Common fees include sales tax (5-10% depending on state), registration and title fees ($200-$500), documentation fees ($100-$300), dealer fees (varies), and sometimes acquisition fees. These fees are typically rolled into your loan amount, increasing the total financed amount and monthly payment. Always ask for a detailed breakdown of all fees.

Most car loans allow early payoff without penalties, but always check your loan agreement. Making extra payments reduces total interest and shortens your loan term. Even an extra $50-$100 per month can save hundreds in interest and help you own your car months or years earlier. Use our calculator's extra payment feature to see potential savings.

New car loans typically offer lower interest rates (3-6%) with longer terms (up to 84 months) because they have full warranty coverage and lower default risk. Used car loans have slightly higher rates (4-8%) and shorter terms (up to 72 months) due to higher depreciation and repair risks. New cars depreciate faster initially but come with warranties.

Compare both options. Dealers may offer promotional rates (0-2% APR) on new cars but might mark up standard rates for profit. Banks and credit unions often offer competitive rates, especially for members with good credit. Get pre-approved from your bank or credit union before visiting dealers to strengthen your negotiating position and avoid rate markups.