Car Payment Calculator
Free car payment calculator. Estimate your monthly auto loan payment, total interest, and total cost from price, down payment, APR, and term.
Quick answer
Monthly payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount (vehicle price minus down payment minus trade-in), r is the monthly rate, and n is the number of months. APR includes loan fees and is the right rate to use here, not the advertised "rate."
Car Payment Calculator
How it works
Calculates your monthly auto loan payment using the same amortization formula as a mortgage. Inputs are the loan amount (after down payment and trade-in), the APR, and the loan term in months. Result excludes insurance, taxes, and registration fees.
When to use it
Use this before walking into a dealership so you know what payment your budget can actually support, and so the finance manager can't surprise you with a longer term to hit a target monthly number.
Common mistakes
Stretching the loan to 72 or 84 months to lower the payment. Long auto loans put you underwater on the car (you owe more than it's worth) and dramatically increase total interest paid. 60 months is a reasonable cap; 48 is better.
How the car payment calculator works
Auto loans use the same fixed-rate amortization formula as mortgages:
M = P × [r(1+r)^n] / [(1+r)^n − 1]. P is the amount financed (sticker price plus
tax, title, and fees, minus down payment and trade-in equity). r is the monthly interest
rate (annual rate ÷ 12). n is the loan term in months — typically 36, 48, 60, 72, or 84.
Total cost is the monthly payment times n. Total interest is total cost minus the amount
financed.
Use the APR (annual percentage rate), not the advertised "rate." APR includes origination fees, doc fees, and other loan costs rolled into the financing. A loan with a 6% rate and $500 in fees has a real APR closer to 6.5%. Banks and credit unions are required to disclose APR by federal law (Truth in Lending Act); dealerships sometimes lead with the rate to make the loan look cheaper.
When to use it
Run this calculator before walking into the dealership. Decide your maximum monthly payment based on your budget, then back into the maximum loan amount you can afford at current APRs. That gives you a hard ceiling on negotiated price + tax + fees. Don't let the F&I office work the deal in monthly-payment terms — they will quietly stretch the term from 60 to 84 months to hit your number, and you will pay thousands more in interest.
It is also the right tool for comparing financing offers. Same vehicle, two lenders: one at 6.5% APR / 60 months, one at 4.9% APR / 72 months. The 72-month loan has a lower payment but you might pay more total interest. Run both and compare the total-cost numbers — that's the real comparison.
Common mistakes
- Confusing APR with rate. APR is the all-in cost including fees; rate is just the interest portion. Always compare APR to APR.
- Stretching to a 7- or 8-year loan to fit the payment. Longer terms mean dramatically more interest paid and a much higher chance of being upside-down (owing more than the car is worth) for years. Cap auto loans at 60 months on used cars and 72 months on new.
- Forgetting tax, title, license, and dealer fees. These can add 8-12% to the price in most states. The dealer will roll them into financing if you let them — increasing your loan amount and total interest. If possible, pay TT&L in cash.
- Underestimating total cost of ownership. The monthly payment is just one piece. Add insurance ($100-$300/month for full coverage), gas, maintenance, and depreciation. A $500/month payment is really $800-$1,000/month all-in.
- Buying the extended warranty in the F&I office. The dealer markup on extended warranties is huge. If you decide you want one, buy it from the manufacturer or a third party at sticker, not financed at 12% APR rolled into the loan.
Frequently asked questions
How do I calculate a car payment?
Use the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1]. P is the amount financed (price + TT&L − down payment − trade-in), r is the monthly APR (annual APR ÷ 12), and n is the term in months. The calculator above does this automatically — just enter your numbers.
What is a good interest rate for a car loan?
Auto loan rates vary by credit score, lender, and term. As a rough guide: a 760+ credit score qualifies for the best advertised rates (~5-7% APR on new, ~6-9% on used). 700-759 sees 6-9% / 8-11%. Below 700, expect 9-15% or higher. Credit unions consistently beat dealer financing for borrowers with average credit.
Should I take a 60-month or 72-month loan?
60 months is the upper end of what most financial advisors recommend. 72 months has a lower payment but significantly more total interest and higher risk of being upside-down for the first 3-4 years. If you can't afford the 60-month payment on a vehicle, consider buying a less expensive vehicle — not stretching the term.
How much should I put down on a car?
20% down is a traditional benchmark on new cars (it covers the immediate depreciation hit when you drive off the lot). 10% on used cars is more typical because used cars have already taken their biggest depreciation hit. Putting more down means a lower payment, less interest, and lower risk of being upside-down.
Is it better to lease or buy?
Lease if you want a new car every 2-3 years and don't drive over 12-15K miles per year. Buy if you plan to keep the vehicle 5+ years or drive a lot. Buying is almost always cheaper in the long run because the monthly payment goes toward equity you can sell. Leasing is a fee paid for the right to use a depreciating asset.