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.
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.
