Auto Loan Calculator

How to Calculate Your Auto Loan Payment

Your monthly car payment depends on four main factors: the vehicle price (minus your down payment and trade-in), the interest rate, and the loan term. A larger down payment reduces the amount you need to finance, which lowers both your monthly payment and total interest. Even a few hundred dollars more upfront can save you over the life of the loan.

Keep in mind: the rate a dealer quotes you isn't always the best available. Many buyers save money by getting pre-approved through a bank, credit union, or online lender before visiting the dealership. Pre-approval gives you leverage to negotiate and ensures you're comparing apples to apples.

New vs. Used Car Loans: What's the Difference?

New car loans typically come with lower interest rates — often 1–3% less than used car loans — because lenders view them as lower risk (the vehicle has a known history and full warranty). However, new cars also depreciate fastest in the first 2–3 years, so a used car with a slightly higher rate can still be the more economical choice overall.

Used car loans are usually limited to shorter terms (48–60 months) and may require the vehicle to meet certain age and mileage thresholds. Some lenders won't finance cars older than 10 years or with more than 100,000 miles. If you're buying used, expect rates 1–3% higher than new, but a lower total purchase price.

How to Get the Best Auto Loan Rate

Start by checking your credit score — it's the single biggest factor in the rate you'll receive. Buyers with scores above 720 typically qualify for the best rates (under 5%), while those below 600 may see rates above 15%. Even improving your score by 50 points before applying can make a meaningful difference.

Get pre-approved from at least 3 lenders before visiting a dealership. This creates competition and gives you a baseline to negotiate against dealer financing. Credit unions often offer the most competitive auto loan rates. And consider a shorter loan term — while 72 and 84-month loans have lower monthly payments, they cost significantly more in total interest.

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Should You Finance Through the Dealer or a Bank?

Dealer financing is convenient — you can arrange everything in one place. But convenience comes at a cost. Dealers often mark up the interest rate by 1–2% as a profit source. They may also push longer terms or add-on products (extended warranties, GAP insurance) that inflate your total cost. Some promotional '0% APR' offers from manufacturers can be excellent — but read the fine print, as they often require shorter terms and excellent credit.

Outside financing (banks, credit unions, online lenders) typically offers more transparency and potentially better rates. Some personal loans can even be used for vehicle purchases at competitive rates, especially for used cars from private sellers where traditional auto loans may not apply.

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