Auto Loan Calculator
Calculate your monthly car payments, total interest costs, and amortization schedule. Plan your auto financing with our comprehensive calculator.
Loan Information
Payment Summary
Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $679.50 | $541.33 | $138.17 | $29,583.67 |
| 2 | $679.50 | $543.81 | $135.69 | $29,039.86 |
| 3 | $679.50 | $546.30 | $133.20 | $28,493.56 |
| 4 | $679.50 | $548.80 | $130.70 | $27,944.76 |
| 5 | $679.50 | $551.32 | $128.18 | $27,393.44 |
| … | … | … | … | … |
| 44 | $679.50 | $659.88 | $19.62 | $2,681.80 |
| 45 | $679.50 | $662.91 | $16.59 | $2,018.89 |
| 46 | $679.50 | $665.95 | $13.55 | $1,352.94 |
| 47 | $679.50 | $669.00 | $10.50 | $683.94 |
| 48 | $679.50 | $683.94 | $4.56 | $0.00 |
Understanding Auto Loans: A Comprehensive Guide
When purchasing a vehicle, most buyers rely on auto financing to make their purchase affordable. Understanding how auto loans work can help you make informed decisions and potentially save thousands of dollars over the life of your loan. Our auto loan calculator helps you estimate monthly payments, total interest costs, and shows a detailed amortization schedule.
Pro Tip: A 20% down payment is generally recommended for auto loans. This helps you avoid being “upside-down” on your loan (owing more than the car is worth) and reduces your monthly payments.
How Auto Loans Work
An auto loan is a secured loan where the vehicle serves as collateral. You borrow money from a lender (bank, credit union, or dealership) and agree to pay it back with interest over a set period of time. Key components of an auto loan include:
- Principal: The amount you borrow to purchase the vehicle
- Interest Rate: The cost of borrowing money, expressed as a percentage
- Loan Term: The length of time you have to repay the loan (typically 24-84 months)
- Down Payment: The initial payment you make toward the vehicle purchase
- Amortization: The process of gradually paying off your loan through regular payments
Factors That Affect Your Auto Loan
1. Credit Score
Your credit score is the most significant factor in determining your interest rate. Borrowers with excellent credit (720+) typically qualify for the lowest rates, while those with poor credit (below 600) may face significantly higher rates.
2. Loan Term
Longer loan terms (72-84 months) lower your monthly payment but result in higher total interest costs. Shorter terms (36-48 months) save you money on interest but have higher monthly payments.
3. Down Payment
A larger down payment reduces the amount you need to borrow, resulting in lower monthly payments and less interest paid over the life of the loan.
4. New vs. Used Vehicles
New cars typically qualify for lower interest rates than used cars. However, new cars depreciate faster, meaning you may owe more than the car is worth more quickly.
Auto Loan FAQs
As of 2023, excellent credit scores (720+) can qualify for rates as low as 3-5% for new cars and 4-6% for used cars. Average credit scores (660-719) might see rates between 5-8%, while lower scores can result in rates of 10% or higher.
A general rule is that your total monthly vehicle expenses (loan payment, insurance, fuel, maintenance) should not exceed 15-20% of your take-home pay. Use our calculator to experiment with different loan scenarios based on your budget.
It’s best to shop around. Get pre-approved from your bank or credit union before visiting dealerships. This gives you a baseline to compare dealer financing offers. Dealers sometimes offer manufacturer incentives that can beat bank rates.
A larger down payment reduces your loan amount, which lowers your monthly payments and total interest costs. It also helps you build equity faster, protecting you from being “upside-down” on your loan if the car’s value depreciates.
Tips for Getting the Best Auto Loan
- Check your credit report before applying and correct any errors
- Get pre-approved before visiting dealerships
- Compare multiple offers from banks, credit unions, and online lenders
- Negotiate the vehicle price separately from the financing terms
- Consider shorter loan terms to save on interest costs
- Make additional principal payments when possible to pay off your loan faster
- Understand all fees including documentation fees, title fees, and registration costs