Car Loan Calculator

Calculate your monthly auto loan payments and total loan cost. Perfect for car buyers comparing financing options.

Assumes fixed interest rate with monthly compounding. Taxes and fees not included.

Loan Amount ($)

Annual Interest Rate (%)

Loan Term (months)

Down Payment ($)

Loan Summary

Monthly Payment: $0.00

Total Principal: $0.00

Total Interest: $0.00

Total Cost: $0.00

Payment Breakdown

Principal Interest

Understanding Car Loan Calculations

Auto loans use amortization formulas to calculate fixed monthly payments that gradually pay down both principal and interest over the loan term. The monthly payment remains constant, but the proportion applied to interest decreases while the principal portion increases over time.

Calculation Formula

The monthly payment is calculated using the standard amortization formula:

Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]

Where:
P = Principal amount (loan amount - down payment)
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (loan term in months)

Example Calculation

For a $25,000 loan at 4.5% APR for 60 months:

Principal (P) = $25,000
Monthly rate (r) = 4.5% ÷ 12 = 0.375% = 0.00375
Number of payments (n) = 60
Monthly payment = $466.08
Total interest = $2,964.80
Total loan cost = $27,964.80

Tips for Car Buyers

Even a small increase in your down payment can significantly reduce monthly payments
A shorter loan term means less total interest paid but higher monthly payments
Interest rates vary based on credit score, loan term, and vehicle age
Consider additional costs like insurance, maintenance, and fuel when budgeting

Frequently Asked Questions

What's included in the monthly payment calculation?

The calculator includes only principal and interest. Real auto loans may include insurance, taxes, and fees which are not calculated here.

How does the interest rate affect my loan?

Higher interest rates increase both your monthly payment and the total cost of the loan. A 1% rate difference can amount to hundreds or thousands over the loan term.

Should I choose a shorter or longer loan term?

Shorter terms have higher monthly payments but lower total interest costs. Longer terms have lower monthly payments but higher total interest costs.

How accurate is this calculator?

This provides estimates based on standard amortization formulas. Actual lender calculations may vary slightly due to rounding methods or additional fees.

Disclaimer: For informational and educational purposes only. Not professional financial advice. Results depend on input assumptions and may differ from actual lender calculations. Consult with a financial professional before making decisions.

References: Amortization calculation formulas; Time value of money principles; Standard auto loan practices.

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