Auto Loan Calculator
Estimate the monthly payment for your car loan.
Updated: Aug 1, 2024
60 Months
Monthly Payment
Amortization
$0/Month
$0
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How to Use MoneyGeek’s Auto Loan Calculator
Taking on an auto loan is a significant financial commitment that can impact your budget for years to come. Aside from the monthly payments, you also have to consider interest rates, loan terms and other factors that can affect your overall financial wellbeing.
MoneyGeek’s auto loan calculator can help you navigate this complex landscape. Here’s a step-by-step guide on how to use it:
1
Enter the loan amount
Start by entering the total amount you wish to borrow. Knowing the exact amount helps you get a clear picture of what you're committing to.
2
Select the loan term
Choose the duration over which you intend to repay the loan. While a longer term might offer lower monthly payments, it usually comes with higher interest costs over the life of the loan.
3
Enter the interest rate
Enter the annual percentage rate (APR) offered by the lender. If you haven't received a specific rate yet, you can use the current average rate for auto loans based on your credit score. Keep in mind that even a slight variation in the interest rate can significantly affect the total amount you'll repay over the life of the loan.
4
Enter the down payment
Enter the down payment you plan to make. Down payments can vary widely, but a common recommendation is to put down at least 20% of the car's total cost if it’s new and 10% if it’s used.
Once you've submitted all the necessary information into our auto loan calculator, it will provide a detailed breakdown of your loan. This information is invaluable for comparing different loan options and making a financially sound decision. Here's what you can expect to see:
Monthly payment
This is the amount you'll be required to pay each month over the life of the loan. Knowing your monthly payment helps you assess whether the loan is affordable given your current budget and financial commitments.
Total interest paid
This figure represents the sum of all the interest payments you'll make over the loan term. It's a crucial number to consider because it shows you the cost of borrowing money, separate from the actual price of the car.
Total cost of the loan
This is the sum of the loan amount, interest and any additional fees. It gives you a comprehensive view of the financial commitment you're making, allowing you to evaluate if the loan is truly worth it in the long run.
Amortization schedule
This table breaks down each monthly payment into principal and interest components. The schedule can be eye-opening, revealing how much of your monthly payment actually goes toward reducing the loan balance versus paying off interest.
Why Use an Auto Loan Calculator
Using an auto loan calculator is a proactive approach to understanding the financial implications of your auto loan choices. Our tool offers a range of benefits that go beyond basic number-crunching:
Comparing loan offers
An auto loan calculator allows you to input various loan terms and interest rates so you can compare multiple offers side by side. This level of comparison can reveal which loan is the most cost-effective over its lifespan.
Deciding on a loan term
This tool helps you see the impact of choosing different loan durations. For instance, you can quickly understand how a shorter loan term might increase your monthly payments but save you money on interest in the long run. This insight enables you to select a term that aligns with your budget and long-term financial goals.
Exploring "what-if" scenarios
This tool allows you to experiment with different variables like down payments. You can see how each change affects your monthly payment and the total cost of the loan.
Long-term financial planning
An auto loan calculator can aid in long-term financial planning. By understanding the total cost of the loan and how it fits into your budget, you can make more informed decisions about other financial commitments and goals.
What Is a Good APR for an Auto Loan?
Based on Federal Reserve data, as of August 2023, the average interest rate for auto loans in the U.S. is 7.88% for a 60-month term and 8.12% for a 72-month term. You can use these average rates as a benchmark to evaluate whether you're getting a good deal or if there's room for negotiation.
Securing a good auto loan rate involves multiple factors, including your credit score, which is a key element in determining your eligibility for lower interest rates. Other factors like your loan duration and down payment also play a role. The kind of car you're buying can affect your rate as well; lenders often offer better rates for new cars than for used ones.
How to Lower Your Auto Payments
Lowering your car payments can provide much-needed financial relief, especially if you're juggling multiple financial commitments. Whether you're looking to ease your monthly budget or allocate funds to other priorities, there are several strategies you can employ to reduce your monthly car payments.
REFINANCE THE CAR LOAN
Refinancing involves taking out a new loan to pay off your existing auto loan, ideally at a lower interest rate. This strategy is particularly effective if your credit score has improved since you first took out your car loan. Just make sure to read the fine print for any fees or penalties that might apply.
EXTEND THE LOAN TERM
Lengthening the duration of your loan will spread out the payments, resulting in lower monthly amounts. It’s worth noting, however, that you’ll end up paying more in interest over the life of the loan with this approach. It's a trade-off that could make sense if you need immediate budget relief but understand the long-term implications.
MAKE A LARGE LUMP SUM PAYMENT
If you come into some extra money, like a tax refund or a bonus, consider making a large payment toward your loan principal. This will not only reduce the amount you owe but could also allow you to renegotiate for lower monthly payments. Just check with your lender first to ensure there are no prepayment penalties.
TRADE IN YOUR CAR
If your current vehicle is a high-end model with hefty payments, consider trading it in for a more affordable option. This could significantly lower your monthly payments and might even eliminate the need for a loan altogether if the trade-in value covers the cost of the cheaper car.
NEGOTIATE WITH THE LENDER
Sometimes, a simple conversation with your lender can lead to reduced payments. If you've been a reliable borrower or if market interest rates have dropped, your lender might be willing to adjust your loan terms. Prepare for this discussion by gathering evidence of your good payment history or any changes in market rates.
FAQ
We answered some frequently asked questions about auto loans to help you gain valuable insight and make an informed decision.
What is an auto loan?
An auto loan is a type of installment loan used to purchase a vehicle. You borrow a certain amount of money from a lender and agree to pay it back, with interest, over a set period. The loan is secured by the vehicle itself, meaning the lender can repossess the car if you fail to make payments.
What is a down payment and how much do I need?
A down payment is an upfront amount you pay when purchasing a car, reducing the total amount you need to borrow. The recommended down payment varies but is often around 20% for new cars and 10% for used cars. A larger down payment can result in lower monthly payments and a better interest rate.
How do interest rates work on auto loans?
Interest rates on auto loans are typically expressed as APR (annual percentage rate). The rate you receive is influenced by various factors like your credit score, loan term, vehicle type and down payment.
What loan term should I choose?
The loan term is the period over which you'll repay the loan, affecting both your monthly payment and the total interest you'll pay. Shorter loan terms, like 36 or 48 months, usually offer lower interest rates but come with higher monthly payments. Longer terms, such as 60 or 72 months, will lower your monthly payment at the cost of a higher interest rate. When choosing a loan term, consider your monthly budget and how much you can comfortably afford to pay.
How are monthly car payments calculated?
Monthly car payments are determined by dividing the total loan and interest amount by the loan term. For instance, the total interest for a $30,000, 72-month loan at 6% is $5,797. So the monthly payment would be $497.18 (($30,000 + $5,797) ÷ 72 = $497.18).
Can I get an auto loan with bad credit?
Yes, it's possible to get an auto loan with bad credit, but expect higher interest rates and less favorable terms. Some lenders also specialize in bad credit auto loans. However, it's advisable to improve your credit score if possible before applying for a loan to access better rates.
Other Auto Loan Resources
About Christopher Boston
Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.
Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.
sources
- Federal Reserve. "Consumer Credit - G.19." Accessed October 20, 2023.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more aboutour editorial policies and expert editorial team.
