How to Use This Calculator
Enter the vehicle price (the purchase price before fees and taxes), your down payment, the annual interest rate your lender quoted, and the loan term. The calculator instantly shows the amount you will finance (vehicle price minus down payment), then computes your fixed monthly payment, total interest over the loan life, and total amount paid. Expand the optional section to set a start date and model the impact of extra monthly payments on your payoff timeline and total interest.
The "Amount Financed" display updates in real time as you type, so you can quickly model different down payment scenarios without recalculating. This is useful when deciding whether to put $3,000 or $5,000 down — the financed amount and resulting monthly payment adjust immediately.
The Auto Loan Payment Formula
Every fixed-rate auto loan payment is calculated using the standard amortization formula:
Where:
- M = Monthly payment
- P = Amount financed (vehicle price − down payment)
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Total number of monthly payments (term in months)
Example: You buy a $30,000 car, put $5,000 down, and finance $25,000 at 6.5% for 60 months. Monthly rate r = 6.5 ÷ 12 ÷ 100 = 0.005417. M = 25,000 × [0.005417 × (1.005417)^60] / [(1.005417)^60 − 1] ≈ $489.15/month. Over 60 payments, you pay $29,348.80 total — meaning $4,348.80 in interest on a $25,000 financed amount.
New vs. Used Car Loan Rates by Credit Score
Auto loan rates vary significantly based on whether you are buying new or used and your credit score. Lenders consider used cars riskier collateral (faster depreciation, harder to value), which typically adds 1–3 percentage points to the rate. Here are approximate rate ranges as of 2025–2026:
| Credit Score (FICO) | New Car Rate | Used Car Rate |
|---|---|---|
| 750+ (Super Prime) | 4.0%–6.0% | 5.5%–7.5% |
| 700–749 (Prime) | 5.5%–7.5% | 7.0%–9.5% |
| 660–699 (Near Prime) | 7.5%–11% | 9.5%–14% |
| 620–659 (Subprime) | 11%–16% | 14%–18% |
| Below 620 (Deep Subprime) | 16%–24% | 18%–26% |
These ranges represent direct lender and credit union rates. Dealer-arranged financing (where the dealer marks up the lender's buy rate) is typically 1–3 percentage points higher. Getting pre-approved from a bank or credit union before visiting the dealership gives you a rate ceiling to negotiate against.
How Loan Term Affects Your Monthly Payment and Total Cost
Auto loan terms typically range from 36 to 84 months. A longer term lowers your monthly payment but substantially increases total interest paid. Here is the impact on a $25,000 auto loan at 6.5%:
| Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 36 months (3 yr) | $770 | $2,723 | $27,723 |
| 48 months (4 yr) | $596 | $3,630 | $28,630 |
| 60 months (5 yr) | $489 | $4,349 | $29,349 |
| 72 months (6 yr) | $419 | $5,167 | $30,167 |
| 84 months (7 yr) | $369 | $5,991 | $30,991 |
Extending from 36 to 84 months cuts your monthly payment by $401 — but costs an extra $3,268 in interest and keeps you in debt for an additional 4 years. Financial planners generally recommend 60 months or less for new cars. If the 60-month payment is not affordable, the vehicle may be outside your budget, and a less expensive car is worth considering before committing to a 72 or 84-month term.
Down Payment Strategy: Why 20% Matters
The standard recommendation for car down payments is 20% of the purchase price. This guideline exists for two concrete reasons.
Reason 1 — Negative equity protection. New cars depreciate roughly 10–15% the moment you drive off the lot, and 15–25% in the first year. If you finance 100% of a $35,000 car, you immediately owe more than the car is worth. If you need to sell or total the car, your insurance payout may not cover the loan balance, leaving you with a debt and no car. A 20% down payment ($7,000) buffers against this gap.
Reason 2 — Monthly payment and total interest. On a $35,000 car at 6.5% for 60 months, putting 0% down means a $683/month payment and $5,980 in total interest. Putting 20% down ($7,000) reduces the financed amount to $28,000, the payment to $547/month, and total interest to $4,784. The $7,000 down payment saves $1,196 in interest and lowers your monthly cash flow requirement by $136.
If you cannot afford 20% down, aim for at least 10%. Anything less than 10% on a new car leaves you at real risk of being upside-down for several years.
APR vs. Interest Rate on Auto Loans
The interest rate (also called the money factor in lease terminology) determines your monthly payment through the PMT formula. It reflects only the cost of borrowing the principal.
The APR (Annual Percentage Rate) includes the interest rate plus any fees folded into the loan — documentation fees, gap insurance if added to financing, extended warranty financing, and certain dealer-added products. Federally required under the Truth in Lending Act (TILA), APR is the standardized metric for comparing loan offers.
Dealer financing markup. When you finance through a dealership, the dealer typically receives a "buy rate" from the lender (say, 5.5%) and may mark it up to 7.5% — keeping the 2-point spread as profit. This is legal but not disclosed. The only protection is knowing your credit score, getting pre-approved before you arrive at the dealership, and negotiating the rate the same way you negotiate the vehicle price.
Dealer Financing vs. Direct Lending: Which Is Better?
Auto financing comes from two primary sources: direct lenders (your bank or credit union) and indirect lenders (banks and finance companies accessed through the dealership). Each has advantages.
Direct lending (bank or credit union) advantages:
- Pre-approval gives you a firm rate before you negotiate, strengthening your position
- Credit unions typically offer rates 1–3% below comparable bank rates
- No dealer markup — the rate you qualify for is the rate you get
- Separates the car purchase negotiation from the financing negotiation, both of which work in your favor
Dealer financing advantages:
- Manufacturer captive finance companies (Toyota Financial, Ford Credit, GM Financial) sometimes offer promotional rates — 0%, 1.9%, or 2.9% — that no direct lender can match
- Convenience: one-stop approval at point of purchase
- May be the only option for buyers with limited credit history or lower scores
The optimal strategy: get pre-approved from your bank or credit union first, then compare that rate against any dealer offer. If the dealer beats your pre-approval rate (especially with a manufacturer promotion), take the dealer rate. Otherwise, use your pre-approval.
Trade-In and Negative Equity: What to Know
Many buyers roll a trade-in into their new car purchase. If your trade-in has positive equity (you owe less than it's worth), the equity reduces your new financed amount — effectively functioning as additional down payment. This is financially sound.
The problem arises with negative equity (being upside-down): you owe more on your current car than it's worth. Rolling this deficit into a new loan is sometimes called "burying" the trade-in. A buyer who owes $18,000 on a car worth $14,000 and trades it in on a $30,000 car effectively starts with a $34,000 balance on a $30,000 vehicle — immediately 13% underwater. This perpetuates a cycle where each successive car purchase starts deeper in negative equity.
Before trading in a car with negative equity, calculate whether paying off the difference in cash before trading makes more financial sense than rolling it into the new loan at the new loan's interest rate.
Making Extra Payments on Your Auto Loan
Extra principal payments reduce your balance faster, cutting the interest you owe on future payments. Because auto loans are typically 5–7 years, the savings from extra payments are substantial — though smaller in absolute terms than on a 30-year mortgage.
On a $25,000 auto loan at 6.5% for 60 months ($489/month), adding $75/month extra:
- Cuts the term from 60 months to approximately 53 months (saving 7 months)
- Reduces total interest from $4,349 to approximately $3,838 (saving ~$511)
- The extra $75/month costs $3,975 in additional cash but returns $511 in interest savings and 7 months of freed-up cash flow at the end
Two important checks before making extra payments:
- Prepayment penalties. Auto loans are more likely than personal loans to carry prepayment penalties. Check your loan agreement before paying extra. A penalty of 1–2% of the remaining balance can offset most of the interest savings.
- Principal application. Confirm with your lender in writing that extra payments apply directly to principal rather than being counted as future scheduled payments. Applying extra to principal is the standard practice at most lenders, but the confirmation protects you from processing errors.
Current Auto Loan Rates (2025–2026)
The Federal Reserve's G.19 Consumer Credit statistical release tracks average auto loan rates nationally. As of 2025, the average 60-month new car loan rate is approximately 7.5–8.5% across all credit tiers — well above the 4–5% lows seen in 2020–2021. The rate environment reflects the Fed's interest rate cycle.
For qualified buyers (720+ FICO), direct lenders and credit unions are offering new car rates in the 5–7% range. Used car rates from the same lenders typically run 1–3% higher. Manufacturer-sponsored promotional financing (0% or below-market rates) remains available on select new vehicles but typically requires excellent credit and may require forgoing a cash rebate — use this calculator to compare the total cost of promotional financing versus taking the rebate and financing at a market rate.
Understanding Your Amortization Schedule
The amortization schedule below the calculator shows every payment over the life of your loan. Each row breaks down the total payment into interest paid that month and principal paid, plus the remaining balance.
Two things are immediately visible in an auto loan amortization schedule:
- Front-loaded interest. In the early months, a larger share of each payment goes to interest because the balance is high. On a $25,000 loan at 6.5%, your first payment of $489 contains $135 in interest and $354 in principal. By month 48, the same $489 payment contains only $48 in interest and $441 in principal.
- Equity build vs. depreciation. Comparing your remaining loan balance (from the schedule) against the car's market value at any point tells you whether you have positive or negative equity. New cars depreciate faster in the early years than the loan balance decreases, which is why negative equity is most common in years 1–3.
Frequently Asked Questions
What is a good interest rate for a car loan?
As of 2025–2026, a good auto loan rate is below 6% for a new car and below 8% for a used car if you have strong credit (720+ FICO). Borrowers with excellent credit (750+) can qualify for rates as low as 4–5% from credit unions. Rates above 10% on a new car typically reflect a credit score below 680 or elevated debt-to-income. The national average for a 60-month new car loan is approximately 7.5–8.5% across all tiers — so borrowers with good credit are well below average, and subprime borrowers are well above it. Getting pre-approved from multiple lenders before shopping takes less than a day and is the single most effective way to ensure you get a competitive rate.
How much car can I afford?
The 20/4/10 rule is the most cited guideline: put at least 20% down, finance for no more than 4 years (48 months), and keep total vehicle costs — payment plus insurance plus fuel — under 10% of gross monthly income. On a $75,000 income ($6,250/month), total car costs should not exceed $625/month. If insurance and gas run $250/month, your payment ceiling is $375/month — which at 6.5% for 48 months finances about $15,500. Many buyers exceed this guideline significantly, which is why average car payments now top $700/month. The 10% ceiling feels restrictive but prevents the compounding financial pressure of high fixed car costs over several years.
Should I put more money down on a car?
In most situations, yes — up to 20%. A larger down payment reduces the financed amount, lowering your monthly payment, total interest, and the risk of negative equity. Cars depreciate 15–20% in the first year, so financing 100% of a new car guarantees immediate negative equity. A 20% down payment buffers against this. The main exception: if you can access 0% or near-0% promotional financing, you may be better served keeping the cash invested and accepting the minimum monthly payment. At any rate above about 4%, a larger down payment typically beats keeping the cash in a savings account. Use this calculator to run both scenarios: compare the total interest paid with a 10% down payment versus a 20% down payment, and weigh that savings against the opportunity cost of the additional cash deployed.
Is 72 or 84 months too long for a car loan?
For most buyers, yes. Long loan terms are appealing because they lower the monthly payment, but they significantly increase total interest and extend the negative equity period. On a $30,000 loan at 6.5%, going from 60 to 84 months saves $100/month but costs over $3,400 more in total interest — and keeps you underwater on the vehicle longer. There is also a practical risk: cars typically require major repairs after 100,000 miles, which often arrives in years 5–7 — the same window when 72 and 84-month borrowers are still making payments. Consumer finance experts broadly recommend keeping auto loan terms at 60 months or less. If the 60-month payment is unaffordable, the correct solution is usually a less expensive vehicle, not a longer loan term.
How does my credit score affect my auto loan rate?
Credit score is the primary determinant of your auto loan rate. Lenders use FICO Auto Score 8 (a specialized model that weights auto loan payment history more heavily than standard FICO). Super-prime borrowers (750+) typically receive rates of 4–6% on new cars; deep subprime borrowers (below 580) often see rates of 18–24% or higher. On a $25,000 loan for 60 months, the difference between a 5% rate and a 20% rate is more than $10,000 in additional interest. If your score is below 700, a 3–6 month improvement effort — reducing revolving utilization below 30%, disputing errors, and avoiding new hard inquiries — can meaningfully shift your tier and save thousands. Even moving from 660 to 700 can cut your rate by 2–4 percentage points on a new car loan.
Methodology
FiscalCalc's auto loan calculator uses the standard fixed-rate amortization formula as defined in the Consumer Financial Protection Bureau's consumer credit guidelines. All calculations are performed client-side in your browser; no personal data is transmitted or stored. Interest rate ranges are sourced from the Federal Reserve G.19 Consumer Credit statistical release, Experian's State of the Automotive Finance Market report, and national rate surveys from Bankrate. Credit score tier definitions and FICO Auto Score guidance follow Experian and FICO's published scoring bands. Depreciation estimates are derived from Kelley Blue Book and CarGurus market data. Rate and depreciation data is reviewed periodically; figures represent approximate national averages and may not reflect current market conditions at any specific lender. This calculator models simple amortizing loans with a fixed interest rate and does not account for variable-rate adjustments, balloon payments, or deferred interest promotions. Last updated: May 2026.