Find your monthly car payment, total cost, and interest breakdown
This calculator estimates your monthly auto loan payment, total interest cost, and the true total cost of the vehicle when financed. Most car buyers focus only on the monthly payment, which is exactly what dealerships want — because it lets them stretch loans longer to hit a comfortable monthly number while quietly increasing the total cost by thousands of dollars. We show you both.
To get an accurate estimate, you'll need: the vehicle price, your down payment (including any trade-in value), the loan term in months, the interest rate (APR), and ideally the sales tax rate for your state. Sales tax on vehicles varies from 0% (Oregon, Montana, New Hampshire, Delaware, Alaska) to over 10% in some local jurisdictions. If you don't know your rate, the U.S. average is around 6%.
Auto loans use the same amortization formula as mortgages — a fixed monthly payment is calculated to retire the principal plus all interest over the loan term. The formula is:
M = P × [ r(1+r)n ] / [ (1+r)n − 1 ]
Where M = monthly payment, P = loan principal, r = monthly interest rate (APR ÷ 12), n = total number of monthly payments.
The key insight for auto loans specifically: cars are depreciating assets. Unlike a house — where appreciation often outpaces the interest you pay — a car typically loses 20–30% of its value the moment you drive off the lot, and another 15–25% in year one. If your loan term is too long, you can easily owe more than the car is worth for years. This is called being "upside down" or "underwater" on the loan, and it's the most common financial trap in car buying.
You're buying a $35,000 vehicle with a $5,000 down payment, financing $30,000 at 7.5% APR. Here's what the math looks like at three common loan terms:
| Loan Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 36 months (3 yr) | $933 | $3,580 | $33,580 |
| 60 months (5 yr) | $601 | $6,070 | $36,070 |
| 72 months (6 yr) | $518 | $7,300 | $37,300 |
| 84 months (7 yr) | $461 | $8,720 | $38,720 |
The 84-month payment looks attractive ($461 vs. $933) — but you pay $5,140 more in interest than the 36-month loan. And here's the harder truth: the car will likely be worth around $14,000–$17,000 in seven years. You financed $30,000 for an asset that depreciated to half its purchase price while you were still paying for it. The 84-month loan is, mathematically, almost always a bad deal. The dealer wins. The lender wins. You lose.
This is the single most important guideline in personal finance for vehicle purchases:
If your dream car requires breaking the 20/4/10 rule, you need a less expensive car or more savings. There's no third option that doesn't end with you in financial trouble.
Conventional wisdom says "buy used to save money." It's mostly right, but for slightly different reasons than people think.
The largest depreciation hit happens in the first 1–3 years. A 3-year-old car has already absorbed 40–55% of total lifetime depreciation, but it still has 70–80% of its useful life remaining. You're buying the same transportation utility at roughly half the cost. On a $35,000 new car vs. a comparable 3-year-old used at $20,000, the used buyer saves roughly $15,000 upfront and avoids the steepest depreciation years.
If you took out an auto loan 12+ months ago, especially through a dealership, there's a good chance you can save real money by refinancing. Three scenarios where refinancing usually pays off:
If your FICO score has gone up by 50+ points since you bought the car (which often happens just from the auto loan itself if you've made on-time payments), you may qualify for a meaningfully lower rate. On a $25,000 balance, dropping from 9.5% to 6.5% saves roughly $1,200 per year for 5 years.
This is more common than most buyers realize. When you finance through a dealership, the dealer earns a commission on the rate spread — they get a "buy rate" from the lender and can mark it up before quoting you. A 1–2% markup is routine. Refinancing through a direct lender (online, credit union, or bank) eliminates this markup.
If general interest rates have dropped since your purchase, refinancing captures the lower environment. Even a 1% rate reduction on a $25,000 loan saves about $700 over the remaining term.
The math test: divide any refinance fees by your monthly savings. If the result is under 12, refinancing pays off if you keep the loan that long. Most auto loan refinances have minimal fees, making this a low-friction win.
The sticker price is not what you pay. The "out the door" price includes everything, and it's the only number that matters when comparing offers. The full breakdown typically includes:
Always ask for the "out the door" price in writing before agreeing to anything. Salespeople will quote monthly payments to you because the monthly payment hides the actual cost. Get the OTD number, divide by the loan formula yourself, and you'll often find $1,500–$3,000 in fees you didn't know about.
Leasing is often presented as cheaper than buying. On a per-month basis, it usually is. On a per-decade basis, it almost never is.
When you lease, you pay for the depreciation that occurs during your lease term, plus interest (called "money factor"), plus fees. At the end, you walk away with no asset. When you buy, you pay for the entire vehicle, but you own it at the end and can drive it for free for years afterward.
If you keep cars long-term, buying is almost always cheaper. The "I get a new car every 3 years" lifestyle is what leasing pays for, and the cost of that lifestyle is real money — typically $4,000–$8,000 more over a decade than buying and holding.
Rates depend heavily on credit score and whether the car is new or used. As of early 2026, average rates run roughly: 6.5–8.5% for new cars with excellent credit (740+), 8.5–11% with good credit (670–739), 11–15% with fair credit (580–669), and 15–22% for subprime credit. Used car rates typically run 1–3 percentage points higher than new car rates. If your offered rate is significantly above these ranges, shop around — there's likely a better offer.
Yes, if you can afford to. Larger down payments reduce the loan amount (less interest paid), reduce the risk of being underwater, and may qualify you for better rates. The only reason not to put more down: if doing so depletes your emergency fund. Cash flow flexibility is more important than slightly lower interest costs.
Most auto loans in the U.S. don't have prepayment penalties, but always check your loan documents. Some subprime loans use "rule of 78" interest calculation that frontloads interest, which can reduce the savings from early payoff. For standard simple-interest auto loans (the most common type), paying extra principal saves real interest dollar-for-dollar.
GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on your loan and what your insurance pays out if the car is totaled. If you put down 20%+ and have a 4-year or shorter loan, you probably don't need it — your equity exceeds depreciation. If you have a small down payment and a long loan, GAP can be worth it. The catch: dealerships charge 2–3x what credit unions charge for the same coverage. If you decide you need GAP, buy it from your credit union or online, not the F&I office.
You can technically get an auto loan with almost any credit score, but the cost varies dramatically. Below 580 ("subprime"), you'll see rates 18–25% — meaning you'll pay nearly the price of the car again in interest. If your score is below 620, consider waiting 6–12 months while you improve it. Even a 50-point credit score increase can save $3,000–$8,000 over a typical loan.
Get pre-approved from a credit union or online lender first, then let the dealer try to beat it. Sometimes the dealer can — they have access to manufacturer-subsidized rates. Often they can't, and you save money by going with your pre-approved offer. The leverage of having an outside pre-approval also limits how much they can mark up the rate spread.
Your trade-in's value functions as additional down payment. If you owe more on your current car than it's worth (negative equity), that difference rolls into the new loan — extending the cycle of being underwater. Best practice: pay off your current car before financing a new one, or at minimum, make sure you have positive equity in the trade.
Credit unions almost always have better rates than dealers or banks. They're not-for-profit, so they pass savings to members rather than collecting them as profit. If you're not already a credit union member, joining is usually easy (most have geographic or employer-based eligibility, and many have an alumni or association membership path). The rate difference between a credit union and a dealer-arranged loan is often 1–3 percentage points — thousands of dollars over the loan life.
For trusted information on auto financing and consumer protections:
This calculator and the information on this page are provided for educational purposes only and do not constitute financial, legal, or tax advice. Auto loan decisions involve significant financial commitments and should be reviewed in the context of your full financial situation. Sales tax rates, fees, and lending terms vary by state and lender — confirm specifics with a licensed professional in your jurisdiction before signing any agreement.