Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A car loan's term is the lever that moves the payment and the interest in opposite directions. On $35,000 at 6.5 percent, six years costs about $588 a month and $7,361 of interest, while four years costs about $830 and $4,841. Stretching to seven years drops the payment to about $520 and lifts interest to about $8,657. A long loan also stays larger than the car's value for longer, which matters if the car is totaled or you want to sell it early.
Before you rely on it
What to check
Compare offers on the same amount and term, and ask whether the quoted rate includes any fees. A lower payment from a longer term is not a better loan.
The common error
Where people go wrong with auto loan calculator
Negotiating the monthly payment instead of the price. A dealer can hit any payment by stretching the term, and the total you pay goes up while the payment looks friendly.
Sensitivity evidence
How annual interest rate changes the monthly payment
| Annual interest rate | Monthly payment | Total interest |
|---|---|---|
| 4.5% | $556 | $5,003 |
| 5.5% | $572 | $6,171 |
| 6.5%worked example | $588 | $7,361 |
| 7.5% | $605 | $8,571 |
| 8.5% | $622 | $9,802 |
Every input, tested
Which input moves the monthly payment most
| Input | Tested from | To | Monthly payment at each end | Swing |
|---|---|---|---|---|
| Loan term | 4.0 years | 8.0 years | $830 to $469 | $362 (61%) |
| Loan amount | $31,500 | $38,500 | $530 to $647 | $118 (20%) |
| Annual interest rate | 5.5% | 7.5% | $572 to $605 | $33 (5.7%) |
Two variables at once
Monthly payment by annual interest rate and loan amount
| Annual interest rate \ Loan amount | $28,000 | $35,000 | $42,000 |
|---|---|---|---|
| 4.5% | $444 | $556 | $667 |
| 5.5% | $457 | $572 | $686 |
| 6.5% | $471 | $588 | $706 |
| 7.5% | $484 | $605 | $726 |
| 8.5% | $498 | $622 | $747 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Loan amount | $35,000 |
| Annual interest rate | 6.5% |
| Loan term | 6.0 years |
| Monthly payment | $588 |
| Total interest | $7,361 |
Complete evidence
Full amortization schedule
Show all 72 rows
| Payment | Opening balance | Principal | Interest | Ending balance |
|---|---|---|---|---|
| Payment 1 | $35,000 | $399 | $190 | $34,601 |
| Payment 2 | $34,601 | $401 | $187 | $34,200 |
| Payment 3 | $34,200 | $403 | $185 | $33,797 |
| Payment 4 | $33,797 | $405 | $183 | $33,392 |
| Payment 5 | $33,392 | $407 | $181 | $32,984 |
| Payment 6 | $32,984 | $410 | $179 | $32,575 |
| Payment 7 | $32,575 | $412 | $176 | $32,163 |
| Payment 8 | $32,163 | $414 | $174 | $31,749 |
| Payment 9 | $31,749 | $416 | $172 | $31,332 |
| Payment 10 | $31,332 | $419 | $170 | $30,914 |
| Payment 11 | $30,914 | $421 | $167 | $30,493 |
| Payment 12 | $30,493 | $423 | $165 | $30,070 |
| Payment 13 | $30,070 | $425 | $163 | $29,644 |
| Payment 14 | $29,644 | $428 | $161 | $29,216 |
| Payment 15 | $29,216 | $430 | $158 | $28,786 |
| Payment 16 | $28,786 | $432 | $156 | $28,354 |
| Payment 17 | $28,354 | $435 | $154 | $27,919 |
| Payment 18 | $27,919 | $437 | $151 | $27,482 |
| Payment 19 | $27,482 | $439 | $149 | $27,043 |
| Payment 20 | $27,043 | $442 | $146 | $26,601 |
| Payment 21 | $26,601 | $444 | $144 | $26,156 |
| Payment 22 | $26,156 | $447 | $142 | $25,710 |
| Payment 23 | $25,710 | $449 | $139 | $25,261 |
| Payment 24 | $25,261 | $452 | $137 | $24,809 |
| Payment 25 | $24,809 | $454 | $134 | $24,355 |
| Payment 26 | $24,355 | $456 | $132 | $23,899 |
| Payment 27 | $23,899 | $459 | $129 | $23,440 |
| Payment 28 | $23,440 | $461 | $127 | $22,978 |
| Payment 29 | $22,978 | $464 | $124 | $22,515 |
| Payment 30 | $22,515 | $466 | $122 | $22,048 |
| Payment 31 | $22,048 | $469 | $119 | $21,579 |
| Payment 32 | $21,579 | $471 | $117 | $21,108 |
| Payment 33 | $21,108 | $474 | $114 | $20,634 |
| Payment 34 | $20,634 | $477 | $112 | $20,157 |
| Payment 35 | $20,157 | $479 | $109 | $19,678 |
| Payment 36 | $19,678 | $482 | $107 | $19,196 |
| Payment 37 | $19,196 | $484 | $104 | $18,712 |
| Payment 38 | $18,712 | $487 | $101 | $18,225 |
| Payment 39 | $18,225 | $490 | $99 | $17,735 |
| Payment 40 | $17,735 | $492 | $96 | $17,243 |
| Payment 41 | $17,243 | $495 | $93 | $16,748 |
| Payment 42 | $16,748 | $498 | $91 | $16,250 |
| Payment 43 | $16,250 | $500 | $88 | $15,750 |
| Payment 44 | $15,750 | $503 | $85 | $15,247 |
| Payment 45 | $15,247 | $506 | $83 | $14,741 |
| Payment 46 | $14,741 | $508 | $80 | $14,233 |
| Payment 47 | $14,233 | $511 | $77 | $13,722 |
| Payment 48 | $13,722 | $514 | $74 | $13,208 |
| Payment 49 | $13,208 | $517 | $72 | $12,691 |
| Payment 50 | $12,691 | $520 | $69 | $12,171 |
| Payment 51 | $12,171 | $522 | $66 | $11,649 |
| Payment 52 | $11,649 | $525 | $63 | $11,123 |
| Payment 53 | $11,123 | $528 | $60 | $10,595 |
| Payment 54 | $10,595 | $531 | $57 | $10,064 |
| Payment 55 | $10,064 | $534 | $55 | $9,531 |
| Payment 56 | $9,531 | $537 | $52 | $8,994 |
| Payment 57 | $8,994 | $540 | $49 | $8,454 |
| Payment 58 | $8,454 | $543 | $46 | $7,912 |
| Payment 59 | $7,912 | $545 | $43 | $7,366 |
| Payment 60 | $7,366 | $548 | $40 | $6,818 |
| Payment 61 | $6,818 | $551 | $37 | $6,266 |
| Payment 62 | $6,266 | $554 | $34 | $5,712 |
| Payment 63 | $5,712 | $557 | $31 | $5,155 |
| Payment 64 | $5,155 | $560 | $28 | $4,594 |
| Payment 65 | $4,594 | $563 | $25 | $4,031 |
| Payment 66 | $4,031 | $567 | $22 | $3,464 |
| Payment 67 | $3,464 | $570 | $19 | $2,895 |
| Payment 68 | $2,895 | $573 | $16 | $2,322 |
| Payment 69 | $2,322 | $576 | $13 | $1,746 |
| Payment 70 | $1,746 | $579 | $9.46 | $1,167 |
| Payment 71 | $1,167 | $582 | $6.32 | $585 |
| Payment 72 | $585 | $585 | $3.17 | $0.00 |
Where the inputs come from
Loan amount is the price after your down payment and trade-in, plus any taxes, fees and add-ons you finance. The rate is the APR on the loan offer; credit unions and banks often quote lower rates than dealer financing, so get a preapproval before you shop. The term in years matters more than most buyers realize: 72- and 84-month loans keep the payment low but raise the interest and the time you owe more than the car is worth.
When the result stops applying
Dealers may focus on the monthly payment and stretch the term or add products to make it fit. Financing extras such as extended warranties and gap insurance raises the balance. Rates depend on credit, the age of the car, and the term, and used-car loans cost more. Negative equity happens when the loan exceeds the car's value, which is common early in long loans.
What to compare it with
Check what you can afford with the auto affordability and 20/4/10 calculators, and compare buying with leasing on the lease versus buy page. The auto refinance calculator shows whether a lower rate helps later. The vehicle total cost of ownership calculator adds insurance, fuel and maintenance.
Worked examples for the Auto Loan Calculator
5 real questions people ask, each worked through with this calculator at its own numbers.
What is the monthly payment on a $25,000 car loan at 7% over 5 years?
| Loan amount | $25,000 |
|---|---|
| Annual interest rate | 7.0% |
| Loan term | 5.0 years |
| Monthly payment | $495 |
Twenty-five thousand over five years is close to the average new-car loan, and seven percent is unremarkable for ordinary credit. The thing worth watching is not the payment. Cars depreciate fastest in the first two years while the loan balance falls slowly. So a borrower here is likely to owe more than the car is worth for a good part of the term.
Check the payoff against a realistic private-sale value at year two. If you might sell early, that gap is real money.
Dealers sell a payment, not a price. A monthly figure can be made to look small by stretching the term, and a longer term means more interest and a longer stretch of owing more than the car is worth. Add-ons like extended warranties, when rolled into the loan, also earn interest. The loan amount you are quoted is often not the price of the car.
Get preapproved by a bank or credit union before walking into the dealership. Then ask for the out-the-door price in writing and compare the dealer's financing rate against the preapproval.
What is the monthly payment on a $30,000 car loan at 6.5% over 5 years?
| Loan amount | $30,000 |
|---|---|
| Annual interest rate | 6.5% |
| Loan term | 5.0 years |
| Monthly payment | $587 |
Thirty thousand is where a lot of mid-range new cars land after tax and fees, and those extras are usually financed along with the vehicle. Borrowers negotiate the sticker price hard and then let a few thousand in add-ons go through without the same scrutiny, which is money borrowed at the same rate for the same five years.
Confirm what is actually in the financed amount. Extended warranties, paint protection and gap coverage all become part of the payment.
Sales tax, title and registration fees are usually added on top of the sticker price, and many buyers finance them without noticing. That pushes the loan above the price of the car from day one. Trade-in equity, when it is negative, gets folded in the same way. The number you borrow is not always the number you agreed to pay for the vehicle.
Ask for the itemised breakdown of the amount financed. Every line between the vehicle price and the loan total should have a name you recognise.
What is the monthly payment on a $35,000 car loan at 7.5% over 6 years?
| Loan amount | $35,000 |
|---|---|
| Annual interest rate | 7.5% |
| Loan term | 6.0 years |
| Monthly payment | $605 |
Six years is a long car loan. Dealers reach for the longer term because it produces a payment the buyer says yes to, and the cost of that is interest paid over two extra years on a depreciating asset. By the time the loan clears, the vehicle is usually well into the part of its life where repairs start.
Ask what the payment would be over four or five years. If it is unaffordable, that is information about the price, not about the term.
Six years is where the risk of negative equity is highest. The loan balance falls slowly early on, while the car loses value quickly, so for a large part of the term a total loss or an early sale can leave a gap. Some lenders and insurers sell gap coverage for exactly this. It is worth pricing only if the down payment is small.
Look up a realistic resale value for this model at years two and three, then compare it with the loan balance at those dates from an amortization schedule. That gap tells you whether gap coverage is worth buying.
What is the monthly payment on a $40,000 car loan at 6% over 6 years?
| Loan amount | $40,000 |
|---|---|
| Annual interest rate | 6.0% |
| Loan term | 6.0 years |
| Monthly payment | $663 |
Forty thousand over six years at a decent rate. The rate is fine. The term is doing the work here, and stretching a car loan across six years means paying interest for two extra years on something that has spent those same two years losing value. Something else is worth noticing here: on a loan this size the insurance premium is usually higher too, and lenders require comprehensive coverage for the life of the loan, which is a cost the payment calculation never shows.
Get an insurance quote for the specific vehicle before signing. On a car at this price it can move the real monthly cost meaningfully.
At this price the vehicle is often a truck or a well-equipped SUV, and the running costs are larger than the payment suggests. Insurance for a higher-value vehicle, fuel, tyres and registration all scale up. A payment that fits the budget on its own can stop fitting once those are added.
Get an insurance quote for the exact vehicle before signing, then add it to the payment. The sum is what the car really costs each month.
What is the monthly payment on a $20,000 car loan at 5% over 4 years?
| Loan amount | $20,000 |
|---|---|
| Annual interest rate | 5.0% |
| Loan term | 4.0 years |
| Monthly payment | $461 |
Twenty thousand over four years at five percent is a sensible loan by most measures. Shorter term, moderate amount, reasonable rate. The total interest is modest, equity catches up with depreciation reasonably early, and the borrower is not tied to the vehicle for most of its useful life.
This shape of loan is the one to aim for. Shorter term, smaller amount, and out from under it before the repairs start.
A shorter term and a lower rate is the combination that keeps a car loan cheap, and it is easy to undermine. Accepting a longer term because the lower payment looks attractive throws away most of the advantage. The four-year term also means the loan is usually paid off while the car still has years of use left, which is when owning it costs least.
Compare this four-year payment against the same amount over six years, and note the difference in total interest. If you can afford the four-year payment, the gap is the price of the flexibility you would be buying.
People also ask
Frequently asked questions
What is a good auto loan term?
Four to five years is a common target. Longer terms lower the payment but raise interest and increase the chance of owing more than the car is worth.
Should I get financing before going to the dealer?
Yes. A preapproval from a bank or credit union gives you a rate to compare with the dealer's offer and strengthens your position.
Does a bigger down payment help?
Yes. It lowers the loan and the interest, may improve the rate, and protects against negative equity as the car depreciates.