Car Loan Calculator
Buying a car is one of the biggest financial decisions most people make. This calculator helps you understand the true cost of financing a vehicle by showing your monthly payment, total interest, and total amount paid over the life of the loan.
Enter the vehicle price, your down payment, loan term in months, and the annual interest rate. The calculator uses the standard amortization formula to compute your fixed monthly payment and breaks down how much of your total cost goes to interest versus principal.
How it works
M = P × r × (1 + r)^n / ((1 + r)^n - 1), where M is the monthly payment, P is the loan principal (price - down payment), r is the monthly interest rate (annual rate / 12), and n is the number of months.
Use cases
- Estimating monthly payments before visiting a dealership
- Comparing different loan terms (36, 48, 60, 72 months)
- Understanding how a larger down payment reduces total cost
- Evaluating the impact of different interest rates on total paid
Frequently asked questions
How is a car loan monthly payment calculated?
The payment uses the standard amortization formula M = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is the amount financed, r is the monthly rate (annual rate ÷ 12), and n is the number of months. Each payment covers that month's interest first, with the rest reducing the principal. This calculator applies the formula automatically.
How does a larger down payment affect my car loan?
A larger down payment reduces the principal you finance, which lowers both the monthly payment and the total interest paid over the loan. For example, putting more money down on the same vehicle shrinks the balance that accrues interest. It can also help you avoid owing more than the car is worth early in the term.
Is a 72-month car loan a good idea?
A longer term like 72 months lowers the monthly payment but increases the total interest you pay, because the balance is outstanding for more time. Shorter terms such as 36 or 48 months cost more per month but less overall. Use the calculator to compare terms side by side and see the trade-off in total cost.
How much interest will I pay on a car loan?
Total interest equals the sum of all monthly payments minus the amount financed. It rises with a higher interest rate, a larger loan, or a longer term. The calculator shows total interest and total amount paid so you can see exactly what the financing adds to the vehicle price.
What is the difference between the interest rate and APR?
The interest rate is the cost of borrowing the principal, while APR (annual percentage rate) also includes certain lender fees, making it a broader measure of the loan's cost. This calculator uses the nominal interest rate; if your loan has fees, the effective APR may be slightly higher.