Car Loan Calculator

A car loan is an amortizing loan where each payment goes toward both interest and principal. In the early months, a larger portion of your payment covers the interest. Unlike a home, a car is a depreciating asset, meaning its value drops over time. This makes it particularly important to avoid "long-term" loans (e.g., 84 months) where you might end up owing more than the car is worth—a situation known as being "upside down" or having "negative equity." To avoid this, financial experts often recommend the 20/4/10 Rule: put 20% down, limit the loan to 4 years, and ensure total car expenses (including insurance) are under 10% of your gross income.

Your APR (Annual Percentage Rate) is heavily influenced by your credit score. Borrowers with excellent credit can often qualify for promotional 0% or 0.9% financing from manufacturers, while those with lower scores may face rates of 10% or higher, significantly increasing the total cost of the vehicle. It is vital to distinguish between the "interest rate" and the "APR"; the APR include the interest rate plus any loan fees, providing a more accurate picture of your actual cost. Our calculator allows you to compare different APR scenarios so you can see how much a small difference in your credit score can save you over the life of the loan.

Finally, consider the Total Cost of Ownership (TCO). The loan payment is only part of the story. Fuel, maintenance, registration fees, and insurance can easily add another $200-$400 to your monthly car budget. Modern EVs may have higher initial loan payments but offer lower TCO due to reduced fuel and maintenance costs. By using our tool to find your monthly payment and then adding these secondary costs, you can ensure that your new car fits comfortably into your overall financial life. Never buy a car based solely on the monthly payment; always look at the total amount you will pay over the entire term.