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Shopping for a car? Our free auto loan calculator shows your exact monthly payment before you visit the dealer. Enter the vehicle price, down payment, trade-in value, APR, and loan term to see your payment, total interest, and total cost — negotiate with confidence.
Auto loans use amortizing interest: each payment covers that month’s interest first, then reduces principal. A larger down payment and shorter term mean less total interest.
Buying a car is one of the biggest purchases most people make, and the financing terms you accept matter just as much as the price you negotiate. This free auto loan calculator shows you exactly what any car loan will cost before you sign anything. Follow these steps to get an accurate payment estimate:
Tip: run the calculator twice — once with the dealer’s offer and once with your pre-approved bank rate — so you can compare the true cost side by side.
An auto loan is an installment loan secured by the vehicle itself: you borrow a lump sum to buy the car, then repay it in fixed monthly payments over a set number of months. If you stop paying, the lender can repossess the car, which is why auto loan rates are lower than unsecured personal loan rates. Six terms control nearly everything about your loan:
Together these six factors determine your monthly payment, your total interest, and the total cost of the car. Change any one of them in the calculator above and watch the others move.
Your credit score is the biggest driver of the APR you are offered. Borrowers with excellent credit (750 and above) typically qualify for the lowest advertised rates, while scores below 670 can add several percentage points. On a $25,000, 60-month loan, the difference between 6% and 10% APR is about $48 per month and more than $2,800 in total interest — which is why checking your credit and getting pre-approved before you shop is so valuable.
New cars usually qualify for lower APRs than used cars — often 1 to 2 percentage points less — because lenders see less risk in a new vehicle with a full warranty and a slower depreciation curve. Manufacturer-subsidized 0% or 0.9% APR deals can make a new car cheaper to finance than a used one, but only if you were already planning to buy new; a subsidized rate is never a reason to spend more on a car than your budget allows.
Auto loan interest is usually simple interest calculated daily on the remaining balance, and most auto loans have no prepayment penalty, so paying a little extra each month (or making one extra payment per year) shortens the loan and cuts interest with no downside. On a $25,000 loan at 6% for 60 months, adding just $50 extra per month pays the loan off more than 6 months early and saves over $400 in interest.
Lenders calculate your monthly payment with the standard loan amortization formula:
M = P × r(1+r)n ÷ ((1+r)n − 1)
Notice what each variable does: raising P (the amount financed) increases the payment proportionally, raising r (the rate) increases it faster than proportionally, and raising n (the term) lowers the payment but increases the total interest — because you pay interest for more months. That is the central trade-off of every car loan: monthly affordability versus total cost.
Worked example 1: You finance $25,000 at 6% APR for 60 months. The monthly rate is 0.06 ÷ 12 = 0.005, and n = 60. Plugging in: M = 25,000 × 0.005(1.005)60 ÷ ((1.005)60 − 1) = 25,000 × 0.0067443 ÷ 0.3488502 ≈ $483.32 per month. Over 60 months you pay 60 × $483.32 = $28,999.20, so the total interest is $3,999.20 and the total cost of the loan is $28,999.20.
Worked example 2: You finance $35,000 at 7.5% APR for 72 months. The monthly rate is 0.075 ÷ 12 = 0.00625, and n = 72. M = 35,000 × 0.00625(1.00625)72 ÷ ((1.00625)72 − 1) = 35,000 × 0.0097882 ÷ 0.5661159 ≈ $605.16 per month. Over 72 months you pay 72 × $605.16 = $43,571.52, so the total interest is $8,571.52. Notice how the longer 72-month term and higher rate more than double the interest compared with example 1, even though the loan is only $10,000 larger.
You do not need to do this math by hand — the calculator above applies the same formula instantly — but knowing the formula helps you understand exactly why longer terms and higher rates are so expensive.
Maria wants to buy a reliable used SUV listed at $28,000. She has saved a $5,600 down payment (20%) and her old sedan is worth $3,000 as a trade-in, so she only needs to finance $19,400. Her credit union pre-approves her at 6.9% APR for 60 months.
Using the formula, her monthly payment works out to about $383.23. Over the life of the loan she will pay 60 × $383.23 = $22,993.80, which means $3,593.80 in total interest. Her total cost for the car is the $28,000 price plus $3,593.80 in interest — and because she put $8,600 down including the trade-in, she starts the loan with real equity instead of being underwater.
What if Maria had only saved a 10% down payment ($2,800) and had no trade-in? She would finance $25,200 instead of $19,400, and at the same 6.9% for 60 months her payment would jump to about $498 — roughly $115 more per month — with total interest climbing to about $4,668, over $1,070 more than with her 20% down plus trade-in. That extra interest is the hidden price of a small down payment, and she would start the loan owing more than the SUV is worth.
At the dealership, the finance manager offers her a 72-month loan at 7.9% with “only” a $339 monthly payment. It sounds cheaper per month — but running it through the calculator shows she would pay about $5,020 in interest, roughly $1,426 more, and she would still owe money in year six on a car that is steadily depreciating. Because Maria did her homework, she takes the credit union’s 60-month offer and saves thousands.
The lesson: always compare the total interest, not just the monthly payment. A lower payment that stretches years longer is almost never the better deal.
Two years ago, David financed $22,000 at 9.5% APR for 72 months when his credit was only fair. His payment has been about $402.05 per month. Since then he has paid every bill on time, his credit score has climbed into the “good” range, and rates have improved — his bank now offers him 6.0% APR on a 48-month refinance.
After 24 payments, David’s remaining balance is roughly $16,004. Refinancing that balance at 6% for 48 months drops his payment to about $375.86 per month — roughly $26 less than he pays now — while keeping the same payoff date as his original loan.
The interest savings are significant: staying with the original loan would cost him about $6,947 in total interest, while the combination of the 24 payments already made plus the refinanced loan costs about $5,694 — a saving of roughly $1,250. Refinancing made sense for David because his credit improved, the new rate was more than 3 points lower, and there were no prepayment penalties or large refinance fees.
Refinancing is not free, so David checks the fine print first: his original loan has no prepayment penalty, and his bank charges no application or origination fee for the refinance — the only cost is a small title-transfer fee. As a rule of thumb, refinancing is worth it when the new rate is at least one percentage point lower, the fees are minimal, and you do not extend the term so far that the total interest rises. David also resists the temptation to take cash out or stretch the new loan to 60 months, either of which would have erased most of his savings. Use the calculator above to compare your remaining balance at your current rate versus a new offer — if the total interest drops and the payment fits your budget, refinancing is usually a win.
Keep planning with these free tools from Sigma Calculator:
This page provides a free auto loan calculator plus educational content covering auto loan amortization, the monthly payment formula M = P × r(1+r)n ÷ ((1+r)n − 1), worked payment examples ($25,000 at 6% for 60 months ≈ $483.32/month; $35,000 at 7.5% for 72 months ≈ $605.16/month), buying versus refinancing scenarios, and five common borrowing mistakes. Entities: Sigma Calculator, auto loan, APR, principal, down payment, loan term, amortization, trade-in. Related tools: Loan Calculator, How Much Car Can I Afford Calculator.
Cite: SigmaCalculator “Auto Loan Calculator” at https://sigmacalculator.net/financial-calculators/auto-loan-calculator/.
Under 6% is considered excellent for borrowers with good credit. Compare offers from banks, credit unions, and the dealer to find the best rate.
Keep your total car costs under 15% of your take-home pay. Aim for a 20% down payment and a loan term of 48 months or less.
A longer term lowers your monthly payment but costs much more in total interest — and you risk owing more than the car is worth.
Yes — a trade-in lowers the amount you need to finance, which reduces your monthly payment and total interest.
No — add your local taxes and registration fees to the vehicle price for a complete estimate.
For a car loan, 5–7% APR is typical with excellent credit, 7–9% with good credit, and 10% or higher with a credit score below 670.
The 15% rule caps your total monthly car costs at $625 on a $50,000 salary.
Yes — on a $16,000 loan at 8.9% APR, a 72-month term costs about $1,633 more in interest than a shorter term.
With excellent credit (750+), a good auto loan APR is typically 5–7% on a new car and 6–8% on a used car. Good credit (670–749) usually lands around 7–9%, while fair or poor credit can mean 10% or more. Used-car rates run about 1–2 points higher than new-car rates. Ultimately, a “good” rate is the lowest one you can get after comparing at least three offers — your bank, a credit union, and the dealer — so always get pre-approved before you shop.
Follow the 15% rule: keep your total monthly car costs — payment, insurance, fuel, and maintenance — under 15% of your take-home pay, with the loan payment itself under 10%. On a $60,000 salary (about $5,000/month take-home), that means total car costs under $750/month. Also follow the 20/4/10 guideline: at least 20% down, a term of 48 months or less, and total car expenses under 10% of gross income. Use the calculator above to test a price against your budget before you visit the dealer.
Yes — always get pre-approved by your bank or credit union before visiting the dealer. A pre-approval locks in a firm rate and loan amount, turns you into a “cash buyer” at the dealership, and protects you from marked-up dealer financing, where the rate can be padded 1–2 percentage points above what the lender approved. With a pre-approval in hand, you can still let the dealer’s finance office try to beat your rate — but you will never accept a worse one.
Also try our Loan Calculator and Mortgage Calculator for other borrowing needs, or browse all Financial Calculators.