Car Loan Calculator

A car loan, or auto loan, is a secured installment loan used to finance the purchase of a vehicle. The car itself serves as collateral, meaning the lender can repossess it if you stop paying — which is partly why auto loan rates are usually lower than unsecured personal loans. You repay the loan in fixed monthly installments over a term that typically ranges from 24 to 84 months.

Several inputs shape your monthly payment. The vehicle price is the starting point, but your down payment and any trade-in value reduce the amount you actually need to borrow. Sales tax, which varies by state or province, is often added to the financed amount. The APR — your interest rate including fees — depends heavily on your credit score, the loan term and whether the car is new or used.

The loan term is the biggest lever over your monthly payment, and the most common trap. Longer terms like 72 or 84 months lower the monthly payment, which feels appealing, but they significantly increase the total interest you pay and keep you in debt longer. Worse, because cars depreciate quickly, long loans often leave borrowers "upside down" — owing more than the car is worth — for years. A shorter term costs more each month but far less overall and builds equity faster.

Depreciation is the hidden cost of car ownership. A new car can lose 20% or more of its value in the first year alone. This is why a larger down payment is so valuable: it offsets early depreciation, reduces the loan balance, and lowers the risk of negative equity. Many advisors suggest putting down at least 20% on a new car and choosing a term of 48 months or less.

Beyond the loan, remember that the true cost of a car includes insurance, fuel, maintenance, registration and repairs. A payment that fits your budget on paper can still strain it once these are added. Using this calculator to model different prices, down payments and terms helps you set a realistic budget and avoid being talked into a longer loan than you need at the dealership.