Your real monthly auto payment
Your real monthly auto payment
Enter the vehicle price, what you are putting down, any trade-in value, the APR your lender quoted, and the term in months. The calculator adds sales tax to the price, subtracts your down payment and trade-in, and amortises the remaining balance to produce your monthly payment, total interest, and the total amount you will actually hand over by the end of the loan.
The number most buyers focus on — the monthly payment — is the least informative one. A dealer can hit almost any monthly figure you name simply by stretching the term. What the calculator is really for is showing you the two numbers the monthly payment hides: total interest paid, and total cost of the vehicle.
Car loans use the standard amortising loan formula, identical to a mortgage:
Payment = P × [ r(1+r)n ] ÷ [ (1+r)n − 1 ]
Here P is the amount financed, r is the monthly interest rate (your APR divided by 12), and n is the number of monthly payments. Amount financed is the vehicle price plus sales tax, minus your down payment and trade-in credit.
Worked example: a $32,000 car with 6% sales tax comes to $33,920. Put $4,000 down and you finance $29,920. At 7.5% APR over 60 months that is roughly $600 per month, and about $6,050 in interest — meaning the car really costs close to $40,000 by the time the last payment clears.
Buyers negotiate hard on price and barely glance at the term, but term length is where most of the damage happens. Stretching that same $29,920 loan from 60 to 84 months drops the payment to roughly $457 — a $143 saving each month that feels like a win. Over the full loan, though, interest climbs from about $6,050 to roughly $8,470. You pay over $2,400 extra for the privilege of a smaller number.
The second problem with long terms is negative equity. Cars depreciate fastest in the first two to three years, while long loans repay principal slowly at the start. On an 84-month loan you can easily owe more than the car is worth for four years or more. If it is written off or you need to sell, you cover the gap out of pocket.
A widely used guideline is 20/4/10: put 20% down, finance for no more than 4 years, and keep total vehicle costs — payment, insurance, fuel, maintenance — under 10% of gross income. It is conservative, and it is designed precisely to keep you from being underwater.
The interest rate is the cost of borrowing the money. The APR bundles in lender fees, so it reflects what the loan actually costs you. When comparing offers, compare APR to APR — a lower headline rate with an origination fee attached can be the more expensive loan.
Dealer financing is convenient but is often marked up: the dealer receives a rate from the lender and may add a margin before quoting you. Getting a pre-approval from your own bank or credit union before you visit gives you a real benchmark, and dealers will sometimes beat it to keep the financing business.
The figure here covers principal and interest on the loan. Running a car involves more:
Add these to the monthly payment before deciding what you can afford. A $600 payment is realistically $850–$950 a month once the car is on the road.
There are only three levers that reduce a car payment without simply deferring the cost: borrow less, secure a lower APR, or buy a cheaper car. Increasing the down payment cuts both the payment and total interest. Improving your credit score before applying can move the APR by several points, which on a five-year loan is worth thousands. And a one- or two-year-old vehicle lets the first owner absorb the steepest depreciation while you get most of the useful life.
Extending the term is the one lever that lowers the payment while raising the true cost. It is worth being clear-eyed that it is a financing decision, not a saving.
Around 20% on a new car and 10% on a used one is the common guideline. A larger down payment lowers both the monthly payment and total interest, and it protects you from owing more than the vehicle is worth during the early years of the loan.
It lowers the monthly payment but raises total interest substantially and keeps you in negative equity far longer. If you can only afford the car at 84 months, that is usually a signal the car is more expensive than your budget supports.
Yes. Both are standard amortising loans using the same payment formula. The differences are term length, typical rates, and that a car is a depreciating asset while a house usually is not.
Get a pre-approval from a bank or credit union first so you have a benchmark APR. Then let the dealer try to beat it. Dealer financing is sometimes genuinely competitive, but without a comparison you have no way to know.