M = L × [r(1+r)^n] / [(1+r)^n - 1] where L = vehiclePrice - downPayment - tradeInValueL is the net loan amount after subtracting the down payment and trade-in value from the vehicle price. M is the monthly payment, r is the monthly interest rate (APR divided by twelve), and n is the total number of monthly payments (term in years multiplied by twelve). This is the standard amortization formula used for all fixed-rate installment loans.
Enter the vehicle price, down payment, trade-in value, APR, and term to get your monthly car payment and total interest costs.
Enter the vehicle price, your down payment, any trade-in value, the APR, and the loan term in years. The calculator shows your monthly payment, the exact loan amount being financed, and total interest over the life of the loan.
Car dealers are skilled at keeping your attention on the monthly payment. But the monthly payment is just one number. The others that matter are the loan amount being financed, the total interest you will pay, and the total cost of the vehicle over time. This auto loan calculator gives you all three from the start. Enter the vehicle price, subtract what you are putting down and what your trade-in is worth, enter the APR and term, and see the full picture before you sit down at the finance desk. Use it to check a dealer quote, compare a longer term against a shorter one, or figure out how much the trade-in actually saves you in monthly payment and total cost.
A familiar scenario
Walking through an example
Example: $25,000 car, $5,000 down, $2,000 trade-in, 7% APR, 5-year term
- 1Vehicle price = $25,000
- 2Down payment = $5,000
- 3Trade-in value = $2,000
- 4Net loan amount L = $25,000 - $5,000 - $2,000 = $18,000
- 5Monthly rate r = 7% / 12 = 0.5833%
- 6Number of payments n = 5 × 12 = 60
- 7M = $18,000 × (0.005833 × (1.005833)^60) / ((1.005833)^60 - 1)
- 8(1.005833)^60 = 1.4176
- 9M = $18,000 × (0.008268 / 0.4176) = $18,000 × 0.019801 = $356.42
- 10Total paid = $356.42 × 60 = $21,385.20
- 11Total interest = $21,385.20 - $18,000 = $3,385.20
When this comes up
Where you would actually use this
- Verifying a dealer finance quote: Dealers sometimes quote a payment without specifying the rate or term clearly. Enter the numbers they give you. If the result does not match what they are quoting, ask them to show the full breakdown before signing.
- Comparing loan terms: A 3-year loan has a higher monthly payment than a 5-year loan on the same car, but significantly less total interest. Run both to see the exact dollar difference and decide whether the savings justify the higher monthly obligation.
- Evaluating the value of a larger down payment: Increase the down payment by $2,000 and see how much the monthly payment drops and how much total interest you save. The interest savings often justify tapping savings, especially at higher rates.
- Comparing dealer financing to a bank or credit union loan: Get a pre-approval rate from your bank or credit union before going to the dealer. Enter both rates to see the monthly and total interest difference. Credit unions typically offer lower rates than dealer-arranged financing.
Where it trips people up
Things people get wrong
- Focusing only on the monthly payment: Dealers can make almost any car seem affordable by extending the term. A $40,000 car at 8% over 7 years has a payment that looks manageable, but total interest exceeds $12,000. Compare total cost, not just monthly payment.
- Not including taxes and fees in the financed amount: Sales tax, registration, dealer fees, and documentation fees are often rolled into the loan. Make sure the vehicle price you enter reflects what is actually being financed, not just the sticker price.
- Overvaluing a trade-in at the dealership: Dealers often offer below-market trade-in values to make room for profit on the back end. Get an independent offer from CarMax or a competing dealer to know your trade-in's actual market value.
- Taking a long term to keep the payment low: Car loans beyond 60 months significantly increase total interest and keep you upside-down for longer. A 72 or 84-month loan on a depreciating asset is a costly decision even if the monthly payment fits the budget.
The math
The formula, formally
- 1Enter the vehicle price (the agreed sale price before taxes and fees).
- 2Enter your down payment: cash you are paying upfront.
- 3Enter the trade-in value if you are applying a trade-in to the purchase.
- 4The calculator subtracts the down payment and trade-in from the vehicle price to get the net loan amount.
- 5Enter the APR quoted by your lender and the loan term in years.
- 6The amortization formula computes your fixed monthly payment, total paid, and total interest.
Terms to know
Glossary
| Term | Definition |
|---|---|
| APR on auto loans | The Annual Percentage Rate for auto loans includes the interest rate and any required lender fees. New car loans typically run 5 to 8% for buyers with good credit. Used car loans often run 1 to 3 points higher. Promotional 0% financing is sometimes available on new cars through manufacturer finance arms. |
| Loan-to-value ratio (LTV) | The loan amount divided by the value of the vehicle. Lenders prefer LTV at or below 100%, meaning the loan does not exceed the car's value. A high LTV increases the risk of being upside-down on the loan if the car depreciates faster than the loan balance. |
| Being upside-down on a loan | Owing more on the car than it is worth. This is common in the first 1 to 2 years of a car loan, especially with small down payments. If the car is totaled while you are upside-down, your insurance payout may not cover the remaining loan balance. Gap insurance covers this difference. |
| Manufacturer incentives | Automakers sometimes offer below-market financing rates (even 0%) on new vehicles to stimulate sales. These offers require financing through the manufacturer's financial arm and are typically only available on specific models during limited windows. |
Expert advice
Pro tips
- Get pre-approved before you shop: A pre-approval letter from your bank or credit union gives you a rate baseline and negotiating power. Dealers must beat or match that rate to earn your financing business. Pre-approval also shows you your true budget before you fall in love with a car.
- Aim for a term of 60 months or less: The average car depreciates about 50% in the first 5 years. A loan longer than 60 months often leaves you owing more than the car is worth for extended periods. Sixty months is the practical maximum for most vehicles.
- Put at least 10 to 20% down on a new car: New cars lose roughly 10 to 20% of their value in the first year. A down payment of that size keeps you from being immediately upside-down. It also reduces total interest and the monthly payment.
- Check if 0% financing beats a cash rebate: Manufacturers sometimes offer a choice between 0% financing and a cash rebate (e.g., $2,000 off the price). Run the numbers both ways. At lower loan amounts and moderate rates, the rebate can save more than 0% financing.
Common questions
Frequently asked questions
For related calculations, try the Loan Calculator, Amortization Calculator, or Debt-to-Income Calculator. Browse all Calculator Online calculators for the full catalog.
Methodology
This calculator uses the standard auto loan calculator formula. Results match those from established financial, scientific, and health references.
Reviewed by
Calculator Online Editorial Team. All formulas verified against authoritative sources before publication.
Last updated
2026-05-24
Sources & References
- Consumer Financial Protection Bureau, Auto Loans
CFPB guide to understanding auto loan terms, rates, and dealer financing.
- Federal Reserve, Consumer Credit
Federal Reserve data on auto loan rates and outstanding balances.
- Investopedia, Auto Loan Guide
Comprehensive guide to auto financing, including how rates are set and how to compare offers.