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How to Use Our Car Loan Calculator

3 min read

How to Use Our Car Loan Calculator

A car is the second-largest purchase most people make. Our Car Loan Calculator helps you understand exactly what your financing will cost before you set foot in a dealership.

What to Enter

  • Vehicle Price -- The negotiated purchase price of the car. This is the number to negotiate, not the monthly payment.
  • Down Payment -- The cash you will put down. A larger down payment means a smaller loan and lower monthly payments.
  • Trade-In Value -- If you are trading in a vehicle, its value reduces the amount you need to finance.
  • Interest Rate (APR) -- The annual percentage rate on the loan. Rates vary widely based on credit score, loan term, and whether the car is new or used.
  • Loan Term -- The length of the loan in months. Common terms are 36, 48, 60, and 72 months.

Understanding the Output

Monthly Payment -- Your fixed monthly obligation for the duration of the loan.

Total Interest -- The total cost of borrowing. This number often surprises people. A $30,000 car at 6.5% for 60 months costs $5,200 in interest alone, making the true cost $35,200.

Total Cost -- Vehicle price plus all interest charges.

The Longer-Term Trap

Stretching to a 72 or 84-month loan lowers your monthly payment but dramatically increases total interest and creates a high risk of being "underwater" -- owing more than the car is worth. On a depreciating asset, shorter loan terms (48-60 months maximum) are almost always the smarter financial choice.

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