Simple Car Loan Calculator
Loan length
Results update as you type. Your numbers stay in this browser only.
- Vehicle price$42,000 · 79%
- Interest$7,602 · 14%
- Sales tax$2,520 · 5%
- Fees$900 · 2%
- Old loan rolled in$0 · 0%
Borrowing $40,420 at 7% APR for 60 months costs $800 a month. Over the full loan you hand the lender $48,022, and $7,602 of that is interest. On a typical depreciation path you stay ahead of the car's value the whole way, so a trade-in or sale later shouldn't leave you owing money.
Most car loan calculators stop at the monthly payment, which is the one number a dealer is happy to talk about all day. This one also shows the interest you'll pay, how long you'll owe more than the car is worth, what happens if you pick 72 or 84 months instead of 60, and whether the new federal tax break on car loan interest applies to you. Type your own numbers above; everything on this page recalculates instantly.
- ✗ 20% downYou're putting down 12% (cash plus trade equity).
- ✗ 4 years or lessYour term is 60 months.
- ? 10% of incomeAdd your gross monthly income above to check this one.
Key Takeaways
The short answers to what buyers ask most, using the newest national figures from Experian, Edmunds, Kelley Blue Book, the Federal Reserve and the IRS.
For a new car, borrowers with prime credit (661–780) averaged 6.15% and super-prime borrowers 4.41% in Experian's second-quarter data. For used cars, the same tiers averaged 8.81% and 6.29%. If your quote is well above your tier's average, keep shopping.
Usually, yes. On $40,000 at 7%, going from 60 to 84 months lowers the payment by $188 but adds $3,188 in interest and keeps you underwater far longer. A quarter of new-car buyers now sign for 84 months or more.
Possibly. For loans taken out after 2024 on new, U.S.-assembled vehicles for personal use, you can deduct up to $10,000 of interest a year through the 2028 tax year, itemizing or not. The break shrinks above $100,000 of modified AGI ($200,000 joint). Used cars and leases don't qualify.
Do the math both ways; the tool below does it for you. On a $40,000, 60-month deal, a rebate has to be bigger than about $5,640 to beat 0% if your outside loan is at 6.15%, and bigger than about $4,160 at 4.41%.
You're not alone: 29.6% of trade-ins toward new cars carried negative equity in the second quarter, averaging $6,884, per Edmunds. Folding that into a 72-month loan at 7% adds about $117 a month and $1,566 in interest.
Often. Experian found that people who refinanced in the first quarter cut their rate by an average of 2.2 percentage points and saved $81 a month. It pays most when your credit has improved or a dealer marked up your original rate.
No. Settle the out-the-door price first, then the interest rate, then the trade-in, each one separately. A payment target lets the deal be stretched to a longer term or padded with add-ons without the number you watch changing much.
It can nudge it up. The Federal Reserve raised its benchmark to 3.75%–4% on September 16. Auto rates don't move point-for-point with the Fed, but a written pre-approval you already hold protects you from increases while it's valid.
What Interest Rate Will You Actually Get?
Your credit score sets the starting line more than anything else. Here are the average rates by tier from Experian's second-quarter auto finance data, along with what each rate costs on a typical loan.
| Credit tier | Score | New APR | $35k new, 60 mo | Used APR | $25k used, 60 mo |
|---|---|---|---|---|---|
| Super prime | 781–850 | 4.41% | $651/mo · $4,064 interest | 6.29% | $487/mo · $4,202 interest |
| Prime | 661–780 | 6.15% | $679/mo · $5,746 interest | 8.81% | $517/mo · $5,999 interest |
| Near prime | 601–660 | 9.71% | $739/mo · $9,320 interest | 13.93% | $581/mo · $9,848 interest |
| Subprime | 501–600 | 13.52% | $806/mo · $13,342 interest | 19.10% | $650/mo · $13,993 interest |
| Deep subprime | 300–500 | 16.11% | $853/mo · $16,191 interest | 21.62% | $685/mo · $16,105 interest |
Look at the gap between the top and bottom rows. On the same $35,000 new car over five years, a deep-subprime borrower pays roughly four times the interest of a super-prime borrower. That's why a few months spent paying down a credit card or fixing an error on your credit report can be worth more than any amount of haggling over floor mats.
Used-car rates run higher in every tier. Lenders see an older vehicle as riskier collateral. It's worth less, it's more likely to break, and it's harder to resell after a repossession, so they price that in. Automakers' finance arms also subsidize rates on new models to move inventory, which is where most of the 0% and 1.9% offers come from. Those deals rarely exist on used cars outside of certified pre-owned programs.
We found that the averages hide a lot of spread. The same buyer can be offered rates several points apart on the same afternoon, depending on whether the quote comes from a credit union, a bank, an online lender or the dealer's finance office. The table tells you where the middle is; your job is to land on the low side of it.
When you finance at the dealership, the finance office sends your application to several lenders. The lender approves you at a "buy rate," and the dealer is usually allowed to write your contract at a higher rate and keep part of the difference as compensation. Lender agreements commonly cap that markup at around two to two and a half percentage points. It's legal, it's routine, and it's negotiable. But only if you walk in already holding a pre-approval from your own bank or credit union. Then the conversation becomes "can you beat this rate?" instead of "is this rate fair?"
How rate shopping affects your credit score
Applying with four or five lenders won't wreck your score the way many buyers fear. Credit scoring models treat multiple auto loan inquiries within a short window as a single search: 14 days under older FICO versions and up to 45 days under newer ones. Do all of your applying inside two weeks and you're covered under every version. Soft-pull prequalification, which many online lenders and credit unions offer, doesn't affect your score at all.
How Long Should Your Car Loan Be?
The loan length is the dial most buyers turn to make a payment "fit." Here's what each choice costs with the numbers you entered above.
| Loan length | Monthly payment | Total interest | All payments | Owe more than it's worth |
|---|---|---|---|---|
| 36 months | $1,248 | $4,510 | $44,930 | Never |
| 48 months | $968 | $6,040 | $46,460 | Never |
| 60 months ◀ yours | $800 | $7,602 | $48,022 | Never |
| 72 months | $689 | $9,197 | $49,617 | 2 years 1 month |
| 84 months | $610 | $10,824 | $51,244 | 3 years 7 months |
In our testing, a $40,000 loan at 7% came out to $792 a month over 60 months and $604 over 84 months. That $188 drop is what the buyer feels. What they don't feel until later is the extra $3,188 in interest and the two additional years of payments, on a car that, by then, may need tires, brakes and a battery all over again.
Long loans have become normal anyway. Edmunds reported that 25.5% of new-vehicle loans in the third quarter ran 84 months or longer, a record, and that 21.2% of new-car buyers signed up for payments of $1,000 or more. Among those four-figure payers, 69% still needed a term of at least 72 months to make it work. The average new-car loan now carries $9,938 in total interest, according to the same report.
When we plugged Edmunds' third-quarter averages ($44,664 financed at 7.0%) into this calculator, a 69-month term reproduced the reported $787 average payment to within about a dollar. Experian's figures point the same way: the average new-car loan term was about 69.5 months early this year. In other words, the "typical" new-car loan is now close to six years long.
Start at 48 months and see if the payment works. If it doesn't, try 60. If you need 72 or 84 months to make the payment comfortable, the car is probably more than your budget wants to spend. Consider a less expensive trim, a lightly used version of the same model, or waiting a few months to build a bigger down payment. A long term can make sense in narrow cases: a promotional rate near 0% (where stretching costs little or nothing), or a car you're certain you'll keep well past the payoff date.
From Sticker Price to Amount Financed
The number you borrow is rarely the number on the windshield. This chart walks your inputs from the vehicle price to the amount financed, step by step.
Sales tax and the trade-in credit
Most states charge sales tax only on the difference between the new car's price and your trade-in's value, which makes trading in at the dealer worth real money. On a $10,000 trade at a 7% tax rate, that's $700 you don't pay. A handful of states, including California and Virginia, tax the full purchase price no matter what you trade in, so selling your old car privately costs you nothing extra there. If your state is one of those, uncheck the trade-in tax box in the calculator to see the true amount. Local taxes can push the combined rate well above the state rate, so use the figure on your county or city tax site.
Fees you can and can't negotiate
Title and registration charges are set by your state's motor vehicle agency and pass straight through. The documentation or "doc" fee is the dealer's own charge for paperwork; some states cap it, many don't, and it varies by hundreds of dollars from one store to the next. Destination charges on a new car are set by the manufacturer and appear on the window sticker. Anything else, from "market adjustments" to nitrogen-filled tires, window etching and paint sealant, is a dealer add-on, and you can say no.
We found that the easiest way to catch extra charges is to ask for an itemized out-the-door price in writing before you visit. Compare that sheet line by line with the purchase contract you're handed later. Anything new on the contract deserves a question.
If you owe $18,000 on a car that's worth $13,000, the dealer will "pay off" your loan and add the $5,000 shortfall to the new one. That balance doesn't disappear. You'll pay interest on it for the whole new loan, it can push you into a higher rate tier because the loan is bigger than the car's value, and interest on rolled-over negative equity does not count toward the new car loan interest deduction. Enter your payoff amount in "Still owed on trade-in" to see its effect.
Will You Owe More Than the Car Is Worth?
Being "underwater" or "upside down" means your loan balance is higher than what the car would sell for. It matters the day the car is totaled, stolen or traded in. The shaded area below is how long that lasts for your loan: Never.
Three things push you underwater: a small down payment, a long loan and fast depreciation. The first two are in your control. A bigger down payment starts you with a cushion, and a shorter loan pays principal down faster than the car loses value. Rolling taxes and fees into the loan works against you, because you're borrowing money that doesn't buy any resale value.
This isn't just a paper problem. If your car is totaled, your insurer pays its actual cash value, not your loan balance. If you owe $31,000 and the car was worth $26,000, you still owe the lender $5,000 for a car you no longer have.
Guaranteed Asset Protection (GAP) pays the difference between your insurance payout and your loan balance after a total loss. It's worth having when the chart above shows a long underwater stretch. It isn't worth having if you put 20% down on a short loan. Many auto insurers sell it as an add-on to your policy, and credit unions often offer it for a flat fee, usually far less than the price quoted in a dealer's finance office, where it also gets financed and earns interest. Whichever you choose, cancel it once you're no longer underwater and ask for a prorated refund if you paid upfront.
How Much Car Can You Afford?
Work backward from the payment you're comfortable with. We use your down payment, trade-in, tax rate, fees, rate and term from the calculator above.
At $600 a month for 60 months at 7%, you can borrow about $30,301. With your down payment, trade-in, tax and fees, that points to a vehicle price of about $32,454. Remember to leave room for insurance.
A common guideline is the 20/4/10 rule: put at least 20% down, finance for no more than four years, and keep the total of your car payment and insurance under 10% of your gross monthly income. It's strict on purpose. Applying it to a $40,000 car with $8,000 down and a 48-month loan at 6.15% gives a payment of about $754. Under the 10% test, that takes a gross income of more than $90,000 a year before insurance is even counted. That's a useful reality check on how far new-car prices have run: Kelley Blue Book put the average new-vehicle transaction price at $50,562 in September.
You don't have to meet all three parts to buy a car responsibly. But if your plan fails two of them, the warning is real. The check at the top of this page scores your own numbers against the rule.
A car payment is the smallest part of owning a car for some households. Before you settle on a price, add your insurance quote for that exact model (it can swing by hundreds of dollars a year between two similar cars), fuel or charging, routine maintenance, registration renewals and parking. Ask your insurer for a quote before you sign: a lender will require full coverage (comprehensive and collision) for as long as it holds the title.
Pay It Off Faster
Even a small extra payment toward principal each month shortens the loan and cuts the interest. Try a number:
Paying $100 extra each month finishes the loan in 4 years 5 months, 7 months early, and saves about $1,018 in interest.
In our testing, adding $100 a month to a $40,000, 72-month loan at 7% paid it off 11 months early and saved about $1,457 in interest. Extra payments work best early, when most of each payment is still going to interest.
Before you send extra money, check two things. First, confirm that your lender applies extra amounts to principal rather than to next month's payment; many servicers have a separate "principal only" option online. Second, check your contract for a prepayment penalty. Most mainstream auto loans are simple-interest loans with no penalty, but some subprime contracts use precomputed interest. Federal law bans the "Rule of 78s" method, which front-loads interest and makes early payoff less valuable, on consumer loans longer than 61 months, but it can still appear on shorter ones.
When refinancing makes sense
Refinancing replaces your loan with a new one, ideally at a lower rate. Experian's data for the first quarter showed the average refinanced rate was 8.05%, with refinancers cutting their rate by 2.2 percentage points and saving $81 a month on average. Credit unions handled about 63% of refinances and delivered the bigger average savings, about $101 a month.
Refinancing tends to pay off if your credit score has climbed since you bought, if you financed at the dealer without comparing offers, or if rates have dropped. It tends not to pay off if you're near the end of the loan (most of the interest is already paid), if the new loan resets you to a long term, or if your car is older and higher-mileage than many lenders will accept. Run your current balance and remaining months through the calculator above at the new rate and compare total interest, not just the payment.
0% APR or the Cash Rebate?
Automakers often make you choose: promotional financing or cash off the price. The right answer depends on the rebate size and the rate you can get elsewhere.
Take the 0% financing. Your payments would total $40,420 with the promotional rate and $43,563 with the rebate financed at 6.15%, a difference of $3,143. At your outside rate, the rebate starts winning once it tops about $5,700.
We found the break-even point surprises most people. On a $40,000 loan for 60 months, a buyer with a 6.15% outside rate needs a rebate of more than about $5,640 for the rebate to beat 0%. With a 4.41% rate, the bar drops to about $4,160. Promotional rates also tend to come with conditions: top-tier credit, a shorter term, or a specific trim. If the 0% offer is only good for 36 months and the payment is too high, the rebate may be the only practical choice anyway.
One wrinkle: in many states, sales tax is figured on the price before a manufacturer rebate is subtracted, so the rebate doesn't lower your tax bill. And ask whether you can take the rebate and still finance with the automaker's lender at its standard rate. Sometimes the combination beats both offers.
The Car Loan Interest Tax Deduction
The 2025 tax law created a temporary deduction for interest on loans for new, American-assembled personal vehicles. Here's a rough estimate of what it's worth to you in the first year of your loan.
Your first 12 payments include about $2,608 of interest. You could deduct about $2,608, worth roughly $574 off your federal income tax at the 22% bracket.
Who qualifies
The deduction covers interest paid on loans taken out after December 31, 2024, for tax years through 2028. The vehicle must be new (its original use has to start with you), have its final assembly in the United States, weigh under 14,000 pounds, and be bought mainly for personal use. The loan has to be secured by a first lien on that vehicle. Leases don't qualify, used cars don't qualify, and interest on negative equity rolled in from a trade-in doesn't qualify. Refinanced loans can qualify, but only up to the balance of the original loan.
You can claim up to $10,000 of interest a year whether or not you itemize. The cap shrinks by $200 for every $1,000 that your modified adjusted gross income exceeds $100,000 ($200,000 for joint filers), which means a single filer phases out completely at $150,000 and a joint return at $250,000.
Lenders that receive $600 or more of interest from you in a year are required to report it on Form 1098-VLI, with a copy due to you by January 31. That form won't confirm the car qualifies (the statement carries a warning that the full amount may not be deductible), so check the vehicle's final assembly point yourself. The window sticker on new cars lists the final assembly location, and the NHTSA VIN decoder shows the plant.
Our estimate uses the interest in your first 12 payments and your federal bracket. Your real deduction depends on which months fall in each calendar year, state tax rules and the rest of your return, so treat it as a ballpark and confirm with a tax professional or the IRS instructions for the year you file.
In the Finance Office: What to Watch For
The finance and insurance (F&I) office is where the price you negotiated turns into the contract you sign. These are the products you'll be offered and what they cost when rolled into a loan like yours.
| Product | What it does | Often cheaper at | Worth it when |
|---|---|---|---|
| GAP coverage | Covers loan balance above insurance payout after a total loss | Your auto insurer or credit union | Small down payment, long term |
| Extended warranty / service contract | Pays for covered repairs after the factory warranty | Automaker's own plan, bought later; quotes from several dealers | Models with costly known repairs; read exclusions |
| Credit life / disability insurance | Pays the loan if you die or can't work | A term life or disability policy you already have | Rarely; it should be listed as optional, not required |
| Prepaid maintenance | Oil changes and inspections paid upfront | Paying as you go | Only if priced below the service menu |
| Etching, sealants, nitrogen, protection packages | Cosmetic or theft-deterrent extras | Do-it-yourself kits or skip entirely | Almost never |
Rolled into your loan, a $2,000 add-on raises the payment by $39.60 a month and costs $2,376 by the final payment, and $376 of that is interest.
The pitch for these products is almost always framed as "only $30 more a month." That framing is the trap. A monthly number hides both the full price and the interest, and it makes a $2,000 product sound like pocket change. Ask for the total price of each item, ask whether it's refundable if you sell the car or pay the loan off early, and remember you can buy most of them later, or not at all.
Federal regulators have been watching this closely. In March, the Federal Trade Commission sent warning letters to 97 dealership groups about advertising prices that leave out mandatory fees, requiring add-ons that weren't in the advertised price, and advertising prices only available to buyers who finance with the dealer. The FTC's broader rule on car-sale practices was struck down in court in early 2025, but the agency still enforces its general ban on deceptive practices, and states are writing their own rules.
Some dealers let you drive home before the loan is final. Days later, they call to say the lender rejected the deal and you need to come back to sign at a higher rate or with a bigger down payment. Before you drive off, ask in writing whether your financing is final. If you get that call, you're generally not obligated to accept new terms; ask for your down payment and trade-in back. Read the contract for a cancellation clause, and if the dealer won't return your trade or deposit, contact your state attorney general.
Year-by-Year Payoff Schedule
How your payments split between principal and interest each year, the balance left at year-end, and how that compares with the car's estimated value.
| Year | Principal paid | Interest paid | Balance left | Est. car value | Your equity |
|---|---|---|---|---|---|
| Year 1 | $6,997 | $2,608 | $33,423 | $33,600 | $177 |
| Year 2 | $7,502 | $2,102 | $25,921 | $28,560 | $2,639 |
| Year 3 | $8,045 | $1,560 | $17,876 | $24,276 | $6,400 |
| Year 4 | $8,626 | $978 | $9,250 | $20,635 | $11,385 |
| Year 5 | $9,250 | $354 | $0 | $17,539 | $17,539 |
Notice how the interest column shrinks each year. On a standard simple-interest auto loan, interest is charged on whatever balance is left, so the first year carries the most. That's also why paying a few days early each month, or making an extra payment early in the loan, saves more than the same money later. Paying late does the opposite: interest keeps accruing on the higher balance, on top of any late fee.
What to Do in Your Situation
Expect rates in the teens or higher, and expect dealers to steer you toward "buy here, pay here" lots. Before you shop, pull your free credit reports at AnnualCreditReport.com and dispute any errors. Then try a credit union, since many have programs for thin or damaged credit, and get a pre-approval even if the rate isn't great; it's still a ceiling the dealer has to beat. A bigger down payment and a cheaper car do more for you than a co-signer you can't afford to let down. Plan to refinance after 12 months of on-time payments.
If you can wait, waiting is usually cheapest: keep making payments (plus a little extra) until the balance falls below the car's value. If you must replace it now, pay the shortfall in cash if you can, choose a cheaper replacement so the combined loan stays manageable, and avoid stretching to 84 months to hide the gap; that's how buyers end up underwater twice. Ask your current lender for the exact 10-day payoff amount, and get a written trade-in offer from at least two other buyers before you accept the dealer's number.
Under the Servicemembers Civil Relief Act, a car loan you took out before entering active duty can be capped at 6% interest during your service; send your lender a written request with a copy of your orders, up to 180 days after service ends. The law also limits repossession of a vehicle financed before service without a court order. Be wary of dealers clustered outside bases that advertise "E-1 and up approved." Compare their offers with your on-base credit union first.
A car payment that runs past age 80 or into a period when you expect to drive less is a payment you may end up making on a car you don't use. Shorter terms protect you, and so does buying a dependable used car with cash or a small loan. If a relative is co-signing or you're co-signing for one, remember that the co-signer is fully responsible for the debt and that late payments land on both credit reports. The Equal Credit Opportunity Act bars lenders from turning you down because of your age, and retirement income such as Social Security counts as income.
You have plenty of company: Americans owed $1.71 trillion on auto loans in the second quarter, according to the Federal Reserve Bank of New York, and the share of auto balances sliding into serious delinquency edged up to 3.00% at an annual rate. Call your lender before the payment is late, not after. Many lenders offer a deferral that moves one or two payments to the end of the loan or a short-term modification, but they're more flexible before an account goes delinquent. In many states a lender can repossess without going to court once you're in default, so don't wait for a letter. A nonprofit credit counselor can help you build a budget and talk to creditors. If a servicer won't answer, misapplies payments or threatens you, file a complaint.
California's CARS Act took effect on October 1. Dealers must show the total price, including dealer price adjustments and installed items, in many ads and in their first written reply about a specific vehicle. When they discuss monthly payments in writing, they have to state the total you'll pay over the loan and warn that a smaller monthly payment can mean a higher overall cost. Dealers can't charge for add-ons that give you no benefit. And on used vehicles priced at $50,000 or less, you get a three-day right to cancel, as long as the car isn't driven more than 400 miles; the dealer may charge a restocking fee and a per-mile charge for miles over 250.
Co-signing gives a young buyer a better rate, but the loan shows up on your credit report and counts against your own borrowing. A safer middle path: help with the down payment instead, keep the car modest, and pick a term short enough that it ends before graduation, a move or a job change. If you do co-sign, set up account alerts so you know about a missed payment before it's reported.
This calculator estimates payments on a standard simple-interest auto loan with equal monthly payments. Your lender's numbers may differ slightly due to the date of your first payment, daily interest accrual, rounding and fees. The depreciation curve is a general rule of thumb, not an appraisal. Rates shown by credit tier are national averages, not offers. Tax estimates are for general information only and aren't tax advice; confirm eligibility with the IRS or a tax professional. Nothing on this page is a loan offer, and we don't collect or store the numbers you enter.
Key sources: Experian State of the Automotive Finance Market · Edmunds · Kelley Blue Book · Federal Reserve · Internal Revenue Service · Federal Trade Commission · Consumer Financial Protection Bureau · Federal Reserve Bank of New York