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Car Loan Calculator

Calculate monthly payments, total interest, and payoff timeline for any auto loan. Compare new vs used car financing scenarios.

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How Car Loans Work

Auto loans are installment loans that use the same amortization formula as mortgages. Your monthly payment covers both interest on the remaining balance and a portion of the principal. Early payments are interest-heavy; later payments are mostly principal.

New vs Used Car Rates

New car rates are typically 1-2% lower than used car rates. As of 2026, average new car rates range from 5-8% while used car rates range from 7-12%, depending heavily on credit score. A 720+ credit score qualifies for the best rates.

Choosing the Right Loan Term

Shorter terms (36-48 months) have higher payments but save thousands in interest. Longer terms (72-84 months) lower monthly payments but cost significantly more overall and risk you being "underwater" (owing more than the car is worth). Financial advisors recommend 48-60 months maximum.

The True Cost of a Car

Beyond the loan payment, factor in insurance ($150-300/month), fuel ($100-250/month), maintenance ($50-100/month), and depreciation. A $35,000 car typically costs $800-1,100/month in total ownership costs.

How Auto Loan Interest Rates Are Determined

Your auto loan rate depends on your credit score, loan term, new vs used vehicle, down payment amount, and the lender. Credit scores above 750 typically qualify for the best rates (4-6%), while scores below 650 may see rates of 10-18% or higher.

New Car vs Used Car Financing

New car loans generally have lower interest rates (0.5-2% less) than used car loans because the collateral retains more value. However, new cars depreciate 20-30% in the first year, making used cars a better value for many buyers. Use our Car Affordability Calculator to set your budget before shopping.

The True Cost of Longer Loan Terms

Stretching a loan from 48 months to 72 months lowers your payment but dramatically increases total interest. On a $30,000 loan at 6.5%, a 72-month term costs $3,200 more in interest than 48 months. You also risk being "underwater" (owing more than the car is worth) for a longer period. Our Early Payoff Calculator shows how extra payments can counter this.

Frequently Asked Questions

What credit score do I need for a car loan?
Most lenders require a minimum score of 580-620. Scores above 720 qualify for the best rates (5-7% for new cars). Below 600, expect rates of 12-20% or may need a cosigner.
Should I get a longer loan term for lower payments?
Avoid terms over 60 months if possible. A 72-month term on a $30,000 loan at 7% costs about $2,700 more in interest than a 48-month term. You also risk negative equity.
Is it better to finance through the dealer or a bank?
Always get pre-approved at a bank or credit union first, then compare to the dealer's offer. Dealers can markup rates by 1-3%. Having a pre-approval gives you negotiating leverage.
Should I put money down or keep cash?
A 20% down payment is ideal — it reduces the loan amount, avoids being underwater, and may qualify you for a better rate. But don't drain your emergency fund.

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Car Affordability

How much car can you afford?
What credit score do I need for a good auto loan rate?
Excellent credit (750+) typically gets rates of 4-6%. Good credit (700-749) gets 5-8%. Fair credit (650-699) sees 8-12%. Below 650, expect 12-20%+. Even a small credit score improvement can save thousands over the loan term.
Should I get pre-approved before visiting a dealer?
Yes. Pre-approval from a bank or credit union gives you a baseline rate to compare against dealer financing. It also strengthens your negotiating position and prevents the dealer from inflating the rate for a higher commission.
How much should I put down on a car?
Financial advisors recommend 20% down for new cars and 10% for used cars. A larger down payment reduces your loan amount, lowers monthly payments, and helps you avoid being underwater on the loan.