Car Loan Repayment Calculator: Calculate Monthly Payments & Interest

How to Use This Auto Loan Calculator

Buying a car is often the second largest purchase you will make in your life. To avoid "sticker shock," you need to know exactly how the financing works before you walk into the dealership. Our tool allows you to simulate different financing scenarios by adjusting the four key levers of an auto loan:

• Vehicle Price: The negotiated price of the car (after rebates).
• Down Payment / Trade-In: Cash you put down upfront plus the value of your old car.
• Interest Rate (APR): The annual rate charged by the lender. Note: Used cars typically have higher rates than new cars.
• Loan Term: How many months you will take to pay it back (usually 36 to 84 months).

Pro Tip: Don't just look at the "Monthly Payment" result. Look closely at the "Total Interest Paid" figure. This is the true cost of borrowing the money.

The "Dealer Trap": Why Monthly Payment Isn't Everything

When you sit down with a finance manager at a dealership, they will almost always ask: "What monthly payment are you looking for?"
Warning: This is a trap.

If you say, "I want to pay $400 a month," the dealer can easily make that happen. They will simply extend your loan term from 60 months to 84 months (7 years) or increase your down payment requirement. You might get the $400 payment, but you could end up paying thousands more in interest over the life of the loan.

The Solution: Use the calculator above to negotiate based on the Total Out-the-Door Price of the car, not the monthly payment.

The Math: How Car Loan Amortization Works

Unlike a credit card (revolving debt), a car loan is an amortized installment loan. This means your monthly payment is fixed, but the split between Principal and Interest changes every month.

The Formula

What This Means for You: In the beginning of your loan, a larger chunk of your payment goes toward Interest. As you get closer to the end, more of your payment goes toward Principal. This is why paying off a car loan early saves you money—you cut off those future interest payments.

Deep Dive: Loan Term Length (60 vs. 84 Months)

The most common mistake car buyers make today is choosing a long-term loan to lower their monthly payment. Let’s look at the math on a $30,000 Loan at 6% Interest:

The Insight: By stretching the loan to 84 months, you lower your payment by $60/month compared to the 72-month option, but you pay an extra $1,000 in interest. Furthermore, you risk being "upside down" on the loan for longer.

Hidden Costs: Taxes, Fees, and "Upside Down" Risks

Your loan amount isn't just the price of the car. To get an accurate result from the calculator above, you must include:

• Sales Tax: Depending on your state, this adds 4% to 10% to the price.
• Doc Fees: Dealerships charge for paperwork (often $300–$800).
• Title & Registration: State fees to get your license plate.

What is "Upside Down" (Negative Equity)?

Cars depreciate (lose value) quickly. If you have a long loan term and a small down payment, you might owe $20,000 on a car that is only worth $15,000. This is called being "upside down." If you try to sell or trade the car, you will have to write a check for the difference.
The Fix: Aim for a down payment of at least 20% and a loan term no longer than 60 months to stay ahead of depreciation.

Real-World Scenarios: Smart Buying vs. Costly Mistakes

Scenario A: The "Low Payment" Buyer (Mistake)

Buyer: John buys a $40,000 truck.
Strategy: He puts $0 down and takes an 84-month loan at 7% to keep payments low.
Result: He pays $10,700 in total interest. Three years later, he wants to trade it in, but he owes $28,000 and the truck is only worth $22,000. He is trapped.

Scenario B: The "Smart Money" Buyer (Win)

Buyer: Lisa buys the same $40,000 truck.
Strategy: She puts $8,000 down (20%) and takes a 48-month loan.
Result: She pays only $3,800 in interest. She owns the truck free and clear in 4 years and never has negative equity.

Frequently Asked Questions (FAQ)

Does my credit score affect my car loan rate?

Yes, significantly. A buyer with a 750+ score might get 5% APR, while a buyer with a 600 score might pay 12% APR. On a $25k loan, that difference costs you over $3,000 extra.

Can I pay off my car loan early?

Usually, yes. Most modern auto loans are "simple interest" loans with no prepayment penalties. Any extra money you pay goes 100% toward the Principal, reducing your total interest. Check your contract specifically for "Prepayment Penalty" clauses.

What is the difference between APR and Interest Rate?

The Interest Rate is the cost to borrow the principal. The APR (Annual Percentage Rate) includes the interest rate plus any lender fees or prepaid finance charges. APR is the more accurate number to compare.

Should I take the "Cash Back" rebate or the "0% Financing"?

Use our calculator to check! Sometimes taking a $2,000 cash rebate and getting your own loan at a credit union is cheaper than the dealer's "0% APR" offer, because the 0% offer often requires you to pay the full sticker price.

Conclusion: Drive Away with Confidence

Financing a car doesn't have to be a mystery. The dealership has their calculators, and now you have yours. By using the Car Loan Repayment Calculator above, you can walk onto the lot knowing exactly what you can afford, how much interest is fair, and when to walk away from a bad deal.

Ready to see your numbers? Scroll back to the top and input your details now.

Internal Link Suggestions

• Link: "budget planner" -> Link to your Budget Calculator.
• Link: "amortization schedule" -> Link to your general Amortization Calculator.
• Link: "percentage" -> Link to Percentage Calculator (for tax calculations).

External Link Suggestions

• Kelley Blue Book (KBB): Link for checking "Trade-In Value."
• Consumer Financial Protection Bureau (CFPB): Link to their guide on "Auto Loans."