Use this car payment calculator to estimate your monthly car payment and total loan cost. Simply input information such as vehicle price, interest rate, down payment amount, trade-in value, length of the loan, sales tax rate, and registration fees.
You can adjust the input to see how different factors affect your car payment and total interest cost.
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What you should know about auto financing
If you are new to auto financing, it may be helpful to understand how car loans work. Typically, people cannot afford to pay for a car or truck in cash, so they apply for an auto loan from a bank, credit union, online lender, or car dealership.
Once approved, the lender provides a lump sum of money to pay for the vehicle being purchased. You will receive the vehicle to drive while making monthly loan payments until the loan is fully repaid.
Various factors contribute to the monthly payment and total cost of the loan, some of which are within your control. To plan for your expenses, use our car loan calculator to experiment with different values.
How to use the auto loan calculator
Here is a description of the information you can input into the auto loan calculator, including both required and optional fields.
Vehicle Price: Please input the estimated cost of the car. To estimate the cost of a new car, begin with the sticker price (also known as the MSRP). Then, subtract any savings from dealer negotiations or manufacturer rebates. Finally, add any additional costs such as vehicle options and the ‘destination fee' charged on new cars.
When buying a used car, start with the seller's asking price but negotiate for a lower price if possible. Use online pricing guides or local classified ads to determine a fair price.
Interest Rate: To determine an interest rate, there are two options. If you are prequalified or preapproved for a loan, simply enter the offered rate. Otherwise, use the current average interest rate for your credit score.
This table provides Experian's average car loan APRs by credit score, based on the VantageScore credit scoring model, and serves as a useful guide.
Credit score | Average APR, new car | Average APR, used car |
---|---|---|
Superprime: 781-850. | 5.61%. | 7.43%. |
Prime: 661-780. | 6.88%. | 9.33%. |
Nonprime: 601-660. | 9.29%. | 13.53%. |
Subprime: 501-600. | 11.86%. | 18.39%. |
Deep subprime: 300-500. | 14.17%. | 21.18%. |
It is important to note that when the Federal Reserve increases the federal funds rate, auto loan interest rates typically increase as well. The recent Fed rate hikes, which began in 2022, have resulted in car loan interest rates reaching their highest levels in years. While some sources provide monthly updates on average auto loan interest rates, these rates are not broken down by credit score.
In January 2024, the average car loan interest rate was 7.1% APR for new car loans and 11.6% APR for used car loans, according to Edmunds.com. Cox Automotive's 1/23/24 Auto Market Report stated that the volume-weighted average rate was 9.75% for new cars and 14.13% for used cars. These rates are sales-weighted averages based on information from Dealertrack, a software used by auto dealerships.
Enter the loan term, or the length of time you have to pay off the loan. Car loans are usually in 12-month increments, with common terms being 24, 36, 48, 60, 72 or 84 months. It is recommended to aim for a term no longer than 60 months, if possible.
Longer terms will lower your monthly payment, but you will pay much more in interest overall. Down payment (optional). Enter the total amount of cash you plan to put toward the car. Not all lenders require a down payment, but it is recommended to put down at least 20% of a new car's purchase price, or 10% for a used car.
If you cannot afford this amount, put down as much as you can without draining your savings or emergency funds. Providing a down payment can reduce your financing amount and the overall cost of the loan.
Additionally, you may enter the trade-in value of your current vehicle, if applicable. It is recommended to use online appraisal sites for assistance with pricing. Be sure to check the trade-in value rather than the retail cost when using a pricing guide. To establish a baseline, you can also obtain cash purchase offers from online retailers like CarMax or Carvana.
If you have an outstanding loan on the vehicle you plan to trade in, enter the remaining balance as the payoff amount, which can be provided by your lender.
Car Payment Calculator FAQ:
How do car loans operate?
When you secure a car loan from a financial institution, you borrow the money required to purchase the car and pay it back over time with an annual percentage interest rate.
Direct lending vs. dealership financing
You have two options for choosing a lender: direct lending or dealership financing. Direct loans are obtained from financial institutions like banks or credit unions and can be secured before visiting a dealership to purchase a vehicle.
On the other hand, dealership financing can only be secured after arriving at the dealership and negotiating a vehicle purchase.
Auto loans obtained from dealerships typically originate from the captive lending department associated with the automaker of the vehicle being purchased. However, dealerships may also assist in finding rates from third-party institutions with which they partner.
It is beneficial to shop around and obtain preapproval for a loan before arriving at the dealership. When negotiating financing terms, this gives you leverage to have the dealership match or beat the terms you obtained from the direct lender for your financing.
Car loan application process
When filling out a car loan application, provide personal information such as your name, address, employment, and financial history so that the lender can assess your ability to repay the loan.
After approval, you will have options for the loan term. The chosen length of the loan can impact the interest rate, so it is important to calculate the total interest payments over time.
Once the loan terms are selected, the monthly payment can be calculated. This payment includes both principal and interest, and is the minimum required payment for the duration of the loan.
What is the term for a car loan?
The car loan term refers to the length of time you will be paying back the borrowed amount. This period usually ranges from 12 to 84 months, in 12-month increments.
While longer-term loans, such as 72- and 84-month loans, require lower monthly payments, they also increase the risk of being upside down on your loan. An upside-down car loan occurs when you owe more on your car than it is worth. If you decide to sell or trade in your car, you will be required to pay the difference.
What is the interest rate for a car loan?
The interest rate for a car loan is the annual percentage of the financed amount. It represents the cost of borrowing money from a financial institution.
Interest rates are influenced by economic factors and your credit score. During times of economic uncertainty, interest rates tend to be higher, but having a higher credit score can help you obtain a lower interest rate.
Paying bills and debts on time, maintaining a low debt-to-income ratio, keeping credit card balances low, and minimizing the number of accounts opened prior to a vehicle purchase can increase your credit score over time.
What is the sales tax on a car purchase?
Sales tax is a percentage of the car price that you owe to your state and county where you will register your vehicle. You will be taxed based on your primary residence rather than the dealership location.
You can choose to include the sales tax amount in your car loan or pay it separately. Paying separately can typically be done at the dealership. However, if you're purchasing a vehicle at an out-of-county or out-of-state dealership, you may need to pay the sales tax amount at your local DMV.
It's important to research how sales tax works for car purchases in your state. Some states charge tax on the full price of the car, while others charge no tax at all. Most states allow a trade-in credit to offset the taxable amount of a car purchase.
What additional fees will I incur when purchasing a car?
In addition to sales tax, there are other fees that you may be responsible for, such as the:
1. Destination: The destination fee covers the cost of shipping a vehicle from the factory to the dealership.
2. Dealer Documentation: The dealer documentation fee covers administrative tasks related to a car purchase, such This fee includes checking trade-in values, preparing the sales contract, registering the vehicle, issuing license plates, and filing any necessary paperwork.
3. Title and Registration: The title/registration fee is paid annually and covers the cost of registering a vehicle in your state. An annual registration fee may be required by the town or city of your residence.
4. Insurance: By law, car insurance is mandatory and covers the cost of injuries and property damage that you cause if you are found at fault for an accident. Additional coverage types can be included in your policy, which may increase the cost of your premium. Payment can usually be made monthly, semiannually, or annually.
Similar to sales tax, you can typically choose to pay the dealer paperwork cost, destination fee, and initial registration fee separately or as part of your loan.
What is the trade-in value of a car?
It is the amount of money that a dealership is willing to pay for your car when you purchase a new one. To maximize your car's trade-in value before visiting the dealership, follow these important steps:
1. Clean your vehicle and make any necessary minor repairs.
2. Estimate your trade-in value from multiple sources to get an accurate idea of its worth.
3. Obtain multiple offers to sell or trade in your car before visiting a dealership.
4. Allow the dealership to provide their trade-in offer. Use any other offers as leverage to negotiate if their number falls short.
Is it possible to pay off a car loan before the end of the term?
It is usually possible to pay off a car loan early, but it is important to check your financial documents first to ensure that there are no penalties for doing so.
If there are no penalties and you are in a better financial position than when you purchased the car, it may be a good idea to pay more than the minimum or pay off the balance entirely. Making larger payments on your loan can help lower the amount of interest you pay over time, especially for longer term loans.
It can also help you prepare for unexpected expenses. Some institutions may push back your next payment date by a month for each month's worth of balance you prepay.
Over time, you may find yourself several months ahead of your next payment date. This can be helpful if you lose your source of income or incur unexpected expenses. However, it is important to note that your loan balance will continue to accrue interest if you pause payments for a period.
Is it possible to refinance an auto loan?
Yes, you can refinance a car loan. However, it is important to evaluate whether refinancing is a sensible option for your situation. Refinancing a car loan is typically beneficial only if it results in a significant reduction in your interest rate without extending the loan term.
This may be challenging if you bought a new car, as you would be refinancing for a used car, and used car interest rates are usually higher than new car interest rates.
Potential candidates for refinancing include those who have improved their credit score since securing their car loan or those who were taken advantage of by a dealership and given a higher interest rate than what the lender provided.
Those who owe more than their vehicle is worth may not be good candidates for refinancing. If you are having difficulty making payments, speak with your lender about payment relief options before considering refinancing. Working with your lender will not affect your credit score.