MayoCalc / Finance

Auto Loan Calculator

Estimate your monthly car payment, total interest, and see a full cost breakdown.

Last updated April 2026
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Disclaimer: This calculator is for general educational and informational purposes only. It does not constitute financial advice, investment advice, tax advice, or legal advice and is not a substitute for consultation with a qualified professional. No fiduciary or advisory relationship is created by your use of this tool. Results are estimates based on the inputs you provide, standard mathematical formulas, and publicly available data that may not be current and may not reflect your individual financial situation, applicable tax laws, or other relevant factors. Neither MayoCalc nor Cook Media Systems assumes any liability for losses, damages, or other consequences arising from the use of any information or results provided by this tool. Always consult a qualified financial advisor, certified public accountant, or attorney before making financial decisions. See our full Disclaimer and Terms of Service.

How Auto Loan Payments Are Calculated

Auto loan payments use the same amortization formula as mortgages. The calculator takes your loan amount (vehicle price minus down payment and trade-in value), interest rate, and loan term to compute your fixed monthly payment. Unlike leases, every payment builds equity in the vehicle, and you own it outright once the loan is paid off.

Monthly Payment = P[r(1+r)^n] / [(1+r)^n - 1]
Where P = amount financed, r = monthly rate, n = total months

How to Use This Calculator

Enter the vehicle price, your down payment, any trade-in value, the interest rate (APR), and the loan term in months (typically 36, 48, 60, or 72). The calculator shows your monthly payment, total interest paid, and total cost of the loan. Adjust the inputs to see how a larger down payment or shorter term affects your payment and total cost.

The 20/4/10 Rule

Financial advisors often recommend the 20/4/10 rule for auto purchases: put at least 20% down, finance for no more than 4 years (48 months), and keep total transportation costs (payment + insurance + fuel) under 10% of your gross monthly income. This prevents being "underwater" (owing more than the car is worth) and keeps car expenses from crowding out savings and other financial goals. The Car Affordability Calculator helps you determine a reasonable purchase price based on your income.

Short vs. Long Loan Terms

Longer loan terms (72-84 months) reduce monthly payments but increase total interest dramatically. On a $35,000 loan at 6.5%, a 48-month term costs $4,640 in total interest with payments of $826. A 72-month term drops payments to $590 but total interest rises to $7,480. Worse, longer terms increase the risk of being underwater, since cars depreciate faster than you build equity in the early years of a long loan.

Auto Loan FAQ

What is a good interest rate for a car loan?
Rates depend on your credit score, the loan term, and whether the car is new or used. In 2026, borrowers with excellent credit (750+) can expect 4.5-6.0% on new cars and 5.5-7.5% on used cars. Good credit (700-749) adds 1-2 percentage points. Rates above 10% are a sign you should consider improving your credit before buying or increasing your down payment.
Should I pay cash or finance?
If the loan rate is lower than what your money earns invested (for example, a 4% car loan while your savings earns 5% APY), financing and keeping your cash invested makes mathematical sense. If the loan rate is higher, paying cash saves you money. Either way, never drain your emergency fund to buy a car outright.
Does a larger down payment lower my rate?
Not directly, but it lowers the loan-to-value ratio, which can make lenders more willing to approve you and may indirectly qualify you for better terms. A larger down payment also reduces your monthly payment and total interest, and protects you from being underwater on the loan.

Auto Loan Market Context

The average new car loan in the United States carries a balance of approximately $40,000 with a term of 68 months according to Experian data. Average interest rates vary dramatically by credit score: borrowers with scores above 720 typically qualify for rates of 5-7%, while subprime borrowers (below 620) may face rates of 14-20% or higher. A $35,000 loan at 6% over 60 months costs $4,799 in total interest, but the same loan at 15% costs $12,896, a difference of over $8,000.

Financial advisors generally recommend keeping total vehicle costs (payment, insurance, fuel, maintenance) below 15-20% of gross monthly income. The 20/4/10 rule is a popular guideline: put at least 20% down, finance for no more than 4 years, and keep total transportation costs under 10% of gross income. The Car Affordability Calculator helps determine the maximum vehicle price that fits your budget.

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How Auto Loan Terms Affect Total Cost

Stretching a car loan to 72 or 84 months makes the monthly payment look manageable, but the total cost difference is dramatic. On a $30,000 loan at 6.5%: a 48-month term costs $5,100 in interest. A 72-month term costs $7,800. An 84-month term costs $9,200. The longer loan also means you'll owe more than the car is worth for years.

This calculator shows you the monthly payment, total interest, and total cost for any loan amount, rate, and term. Try different scenarios side by side. The 20/4/10 rule is a good framework: 20% down, 4-year max term, total car costs under 10% of gross income. For the full breakdown, see our guide on how much car you can afford.