Car Loan Calculator
Calculate your monthly auto loan payment, total interest, and true cost of the vehicle — including taxes, fees, and trade-in value.
Understanding Your Auto Loan
How Auto Loan Interest Works
Auto loans use simple interest amortization — interest accrues daily on your outstanding balance. Each payment is split between interest (calculated on the remaining balance) and principal (the actual debt reduction). Early payments carry more interest; later payments carry more principal.
Loan Term: The Hidden Trade-Off
Stretching a loan to 72 or 84 months lowers the monthly payment but dramatically increases total interest paid — and keeps you "underwater" (owing more than the car is worth) for longer.
| Term | Monthly (7% APR, $28k loan) | Total Interest |
|---|---|---|
| 36 months | ~$864 | ~$3,100 |
| 48 months | ~$670 | ~$4,150 |
| 60 months | ~$554 | ~$5,250 |
| 72 months | ~$477 | ~$6,350 |
| 84 months | ~$422 | ~$7,450 |
How Trade-In Value Works
A trade-in reduces the amount you need to finance. In most states, trading in also reduces the sales tax you pay — you're taxed on the difference between the new car price and your trade-in value, not the full purchase price.
Getting the Best APR
Your credit score is the biggest factor in your auto loan rate. A difference of 2–3% APR can mean thousands in extra interest over the loan term. Always get pre-approved by your bank or credit union before visiting a dealership — you can then compare that rate to whatever the dealer offers.
Frequently Asked Questions
Should I put money down on a car loan? Yes, if possible. A down payment of 10–20% reduces your loan amount, lowers your monthly payment, and reduces the time you spend underwater on the loan. It also lowers your interest charges.
What is a good APR for a car loan? It depends on your credit score. In 2025–2026, good-credit borrowers (720+) can expect 5–7% on new vehicles. Borrowers with fair credit (620–679) might see 10–15%. Credit union rates are typically 1–2% lower than bank or dealer rates. Use Edmunds to research fair market prices and typical financing offers before you set foot in a dealership.
What does "upside down" or "underwater" mean? You're underwater when you owe more on the loan than the car is worth. This commonly happens in the first 1–2 years of a long loan term, when depreciation outruns your principal paydown. It's a problem if you want to sell or trade before the loan ends. The Car Depreciation Calculator lets you model how quickly a vehicle loses value year by year so you can see when you'll cross back above water.
