Car Loan Calculator
Calculate monthly car payments from price, down payment, trade-in, interest rate and term.
Written by Rahman · Last reviewed
Quick answer
A $30,000 car loan at 7.5% costs $601.14 a month over 60 months, with $6,068 of interest. Stretching the same loan to 84 months drops the payment to $460.15 but raises the interest to $8,652, $2,584 more for the same car. Longer terms also deepen negative equity: a car loses value faster than the loan amortises early on, so you can owe more than the vehicle is worth for much of the term.
- Amount financed24,000.00 (83.2%)
- Total interest4,854.65 (16.8%)
- Total28,854.65
Results are estimates for general guidance and are not financial, tax or legal advice. Except where a calculator names a currency, figures carry no currency of their own: put in pounds and you get pounds back, put in rupees and you get rupees. Figures depend on the assumptions you enter and on rates that change over time. Check current rates and speak to a qualified adviser before acting on them.
About the Car Loan Calculator
A car loan finances the purchase of a vehicle, repaid in fixed monthly instalments over a term that is usually three to seven years. The amount you finance is the vehicle price minus your down payment and any trade-in value.
This calculator estimates your monthly car payment and the total interest cost, so you can set a realistic budget and compare financing offers before visiting a dealer.
Payment = [L × r × (1 + r)^n] / [(1 + r)^n − 1]
L is the amount financed, r is the monthly interest rate, and n is the loan term in months.
Long terms and a depreciating asset do not mix
A car loan differs from a mortgage in one decisive respect: the asset loses value while the debt is being repaid. Stretching the term to reduce the payment extends the period during which the balance can exceed what the car is worth: negative equity, and the reason seven- and eight-year car loans are treated warily.
The repayment schedule works against you early on. On $31,500 borrowed at 7% over seven years, the payment is about $475 a month. After three years you have made 43% of the payments but repaid only 37% of the principal, because the early payments are interest-heavy. New cars meanwhile lose a substantial share of their value in the first year or two.
- Negative equity is not theoretical: it becomes a cash problem the moment the car is written off, since insurance pays market value rather than the loan balance.
- Trading in while underwater usually rolls the shortfall into the next loan, which starts the next car with a balance larger than its value.
- Gap insurance exists specifically to cover the difference, and its existence is a good indication of how common the situation is.
The monthly payment is the wrong thing to negotiate
Dealer finance conversations usually centre on the monthly payment, which is the one number that can be adjusted without changing the cost of the car at all. A longer term, a larger deposit or a balloon payment at the end all reduce it while leaving the price untouched, or increasing what you pay overall.
Three variables set the total cost: the price of the car, the interest rate and the term. A payment figure hides all three, so agreeing to a payment before agreeing those is negotiating with the least informative number in the transaction.
- Settle the price of the car first, then the finance, then the trade-in value. Bundling them makes it impossible to see which one moved.
- Compare offers on APR rather than the advertised rate, since fees rolled into the agreement do not appear in the rate itself.
- Dealer add-ons (paint protection, extended warranties, service plans) are frequently financed alongside the car, so they accrue interest for the full term.
Frequently Asked Questions
How does a down payment help?
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A larger down payment reduces the amount financed, lowering both your monthly payment and the total interest. It can also help you qualify for a better rate.
What is a trade-in value?
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It is the amount a dealer credits you for your existing vehicle. Like a down payment, it reduces the loan amount you need.
Is a longer loan term a good idea?
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A longer term lowers the monthly payment but increases total interest, and you may owe more than the car is worth for part of the term.
What costs are not included?
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Registration, insurance, taxes, fuel and maintenance are separate. Budget for them in addition to the loan payment.
Sources
- 12 CFR § 1026.18 — Regulation Z, closed-end credit disclosures (eCFR) — Backs the advice above to compare offers on APR rather than the advertised rate. Subsection (e) requires the annual percentage rate to be disclosed using that term and described as "the cost of your credit as a yearly rate"; (g) requires the number, amount and timing of payments; (h) the total of payments, "the amount you will have paid when you have made all scheduled payments". It says nothing about negative equity or gap insurance, which are described here from the arithmetic of depreciation rather than from a cited source.