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Car Loan Calculator

Calculate monthly car loan payments with trade-in and down payment

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About Car Loans

Shorter loan terms mean higher payments but less interest paid overall. A 36-month loan costs significantly less in interest than a 72-month loan.

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About This Tool

You're at the dealer, the salesperson says '$399 a month for 72 months.' Sounds reasonable until you do the actual math: that's $28,728 total on a $24,000 car. Plug in price, down payment, trade-in, rate, and term, and see what you're really committing to.

The calculator breaks out monthly payment, total interest, and the all-in total over the life of the loan. Trade-in value reduces the principal, as does down payment — both change the picture more than people expect.

Longer terms (72, 84 months) make payments look small but stretch the depreciation past the loan payoff. You can be six months into year five still owing more than the car is worth. The numbers won't lie about that.

The calculation is the same amortization formula used for any fixed-payment loan, but auto loans have specific quirks worth understanding. Interest is computed on the remaining principal each month; early payments are mostly interest, late payments are mostly principal. So a $24,000 loan at 7% over 60 months has monthly payment around $475, total paid is roughly $28,500, and interest is about $4,500. The first year, you pay closer to $1,500 in interest and $4,200 in principal — by the last year, those numbers have inverted.

A worked example showing depreciation versus payoff: a new $35,000 car financed at 6.5% over 72 months has a monthly payment around $588. After three years, you've paid down maybe $14,500 of principal — outstanding balance is around $20,500. Meanwhile, the car's market value has dropped to roughly $19,000 (typical new-car depreciation is 50% over five years, front-loaded). You're $1,500 underwater. Sell the car and you owe the lender $1,500 in cash to close out, on top of giving up the asset. That gap is how 'negative equity' becomes a real problem if life forces you to sell early.

Where the calculator's number diverges from reality: dealer markup, dealer-installed accessories, extended warranties bundled into the loan, and fees rolled into the amount financed. A dealer offering '0% APR' often offsets it through MSRP-level pricing rather than the discounted price an outside lender's preapproval would give you. Run the calculator with both scenarios — dealer-financed at 0% on the higher price versus bank-financed at 6% on the negotiated price — and compare total paid. Sometimes the 0% wins, often it doesn't.

A useful reframe: the question 'can I afford the monthly payment' is the wrong question. The right question is 'can I afford to be underwater on this loan if I need to sell early.' If your job is stable, your commute is fixed, and you'd keep this car for at least the loan term anyway, the underwater period doesn't matter. If any of those assumptions wobble, the conservative move is shorter terms or larger down payment to stay above water as long as possible.

The about text and FAQ on this page were drafted with AI assistance and reviewed by a member of the Coherence Daddy team before publishing. See our Content Policy for editorial standards.

Frequently Asked Questions

Is a 72-month auto loan a bad idea?
It's not automatically bad, but it's how people end up underwater on cars. New cars depreciate ~50% in five years; a 72-month loan keeps you owing for longer than the car's resale matches. 48–60 months is more conservative.
Should I put 20% down?
20% down keeps you above water on the loan from day one and lowers the interest paid. Going lower works if your rate is good and you'd rather keep cash liquid, but you'll be temporarily underwater on the loan.
How does my credit score affect the rate?
Significantly. The rate gap between excellent (780+) and average (660) credit can be 4–6 percentage points, which on a $30K loan is thousands of dollars over the term. Check your score before shopping.
Should I take the dealer financing or get pre-approved elsewhere?
Get pre-approved at your bank or credit union first, then see if the dealer can beat it. Dealers sometimes offer manufacturer-subsidized rates that are excellent (0% APR promotions). Sometimes they pad your rate to make commission. Walking in with a pre-approval reveals which one.
What's the difference between APR and interest rate?
Interest rate is what you pay on the loan principal. APR includes that plus loan fees, expressed as an annualized percentage. APR is the apples-to-apples number for comparing offers — a low rate with high fees can have a higher APR than a slightly higher rate with no fees.
Should I buy used or new for the loan to make sense?
Used cars depreciate slower (the steepest part of the curve has already happened). A 2-3 year old car with 30K miles can be a much better deal financially — same useful life, much less depreciation hit. New car loans are easier to get and have lower advertised rates, but the total cost of ownership often favors used.
What's GAP insurance and do I need it?
Guaranteed Asset Protection covers the difference between what you owe and what the car is worth if it's totaled. If you put little or nothing down on a 72+ month loan, you'll be underwater long enough to want it. If you have substantial down payment or a shorter loan, it's usually unnecessary.
Can I refinance an auto loan later?
Yes — and worth doing if rates drop or your credit improves. The mechanics are similar to mortgage refinancing: new lender pays off the old loan, you make payments to the new lender at the new rate. Watch for prepayment penalties on the original loan, which are uncommon but exist.