Auto Loan Calculator
Calculate your real monthly car payment - including sales tax, fees, trade-in, and down payment - then compare loan terms side by side and check the payment against the 20/4/10 affordability rule.
The Deal
Remaining loan balance on the car you're trading
Applied to price minus trade-in in most states
The Loan
Add this to check your payment against the 10% affordability guideline
Your Payment
Loan Breakdown
The 20/4/10 Affordability Check
Same Loan, Different Terms
| Term | Monthly Payment | Total Interest |
|---|---|---|
| 36 mo | $1,006.59 | $3,637 |
| 48 mo | $780.65 | $4,871 |
| 60 mo | $645.52 | $6,131 |
| 72 mo | $555.80 | $7,417 |
| 84 mo | $492.02 | $8,730 |
Longer terms shrink the payment but grow the interest - and rates are usually higher on 72-84 month loans than shown here.
Before You Sign
- • Get pre-approved by your bank or credit union before visiting the dealer - it's your negotiating floor
- • Negotiate the car's price, not the monthly payment - payment talk hides the real cost
- • Watch for add-ons in the finance office (warranties, coatings, nitrogen tires) inflating the loan
- • The payment isn't the whole cost: budget for insurance, fuel, and maintenance too
- • If you need 84 months to afford the payment, the honest answer is a cheaper car
How Much Car Can You Afford?
The 20/4/10 Rule
It's the cleanest guardrail in car buying: put at least 20% down, finance for no more than 4 years, and keep the payment (ideally all car costs) under 10% of your gross monthly income. Meeting all three means the car fits your finances instead of consuming them.
Most buyers miss at least one - the average new car loan now runs about six years. Treat the rule as a compass rather than a law: each check you fail is a signal you're buying more car than your income supports, and the fix is usually a smaller number on the windshield, not a longer loan.
Why Long Loans Are So Tempting - and Costly
Stretching from 48 to 84 months can cut the payment by a third, which is exactly how dealers keep monthly numbers palatable as car prices climb. The term-comparison table above shows the price of that relief: the same loan can cost two to three times as much interest at 84 months as at 36.
The bigger danger is depreciation outrunning your payments. Cars lose value fastest in the early years, and a small down payment plus a long term means owing more than the car is worth - being "upside down" - for years. Total your car in that window and insurance pays its market value, not your loan balance.
Getting the Best Deal on the Loan
Shop the Money Before the Metal
Walk in with a pre-approval from a bank or credit union and the dealer's financing has to beat a real number to win your business - and sometimes it will, especially with manufacturer promotional rates on new cars. Without a pre-approval, you're negotiating blind, and the finance office knows it.
Your credit score drives the rate more than anything else. The spread between top-tier and subprime auto rates can exceed ten percentage points - on a $30,000 loan, that's thousands of dollars. If your score needs a few months of work, doing that first can outsave any amount of dealership haggling.
New vs. Used Financing
New cars get lower advertised rates (and occasional 0% promotions), but depreciate hardest. Used cars carry rates a point or two higher, but someone else already absorbed the steepest depreciation. A 2-4 year old vehicle with a solid history is often the financial sweet spot.
Mistakes to Avoid
- • Negotiating around "what payment are you looking for" - always negotiate the out-the-door price
- • Rolling negative equity from your old loan into the new one
- • Financing add-ons - a $2,000 extended warranty at 7% for 72 months isn't $2,000
- • Skipping the gap coverage question when you're putting little down (your insurer often sells it cheaper than the dealer)
- • Focusing on the payment while insurance, fuel, and maintenance push the real monthly cost 50%+ higher
Already Have a Loan?
Auto loans can be refinanced too - worthwhile if your credit improved or rates dropped since you bought. And extra principal payments work the same magic they do on a mortgage: even $50 extra a month meaningfully shortens a six-year loan. Just confirm your loan has no prepayment penalty.
Keep Exploring
Make sure the car fits the bigger picture:
- • See where a car payment fits your budget with the 50/30/20 Budget Calculator
- • Saving up for a bigger down payment? Plan it with the Savings Goal Calculator
- • Juggling car debt with other balances? Compare payoff strategies in the Debt Payoff Calculator
- • Check your real monthly budget first with the Take-Home Pay Calculator
Frequently Asked Questions
How much car can I afford?
The 20/4/10 rule is the standard guardrail: 20% down, a loan no longer than 4 years, and total car costs under 10% of gross monthly income. On a $6,000 monthly income that's roughly a $600 budget covering payment, insurance, and fuel - which points to a more modest car than most dealer math suggests.
What is a good interest rate for a car loan?
It moves with the market and your credit. Borrowers with excellent credit typically land several points below the average, while subprime rates can run into the mid-teens or higher. The only way to know your number is to get pre-approved by a bank or credit union - then let the dealer try to beat it.
Is a 72 or 84 month car loan a bad idea?
Usually. The payment looks friendly, but you pay far more interest, usually at a higher rate, and you spend years owing more than the car is worth. If a 48-60 month payment doesn't fit your budget, that's the car telling you its price doesn't fit your budget.
How much should I put down on a car?
Aim for 20% on a new car, 10% minimum on used. A real down payment offsets first-year depreciation so you're never upside down, lowers your payment, and often earns a better rate. Zero-down deals simply transfer that depreciation risk onto the loan.
Should I finance through the dealer or my bank?
Get pre-approved at a bank or credit union first, then let the dealer compete. Dealer financing is sometimes genuinely better - especially manufacturer promotional rates on new cars - but without an outside offer in hand you have no way to know, and dealer margins on financing are real.
What does it mean to be upside down on a car loan?
Owing more than the car is worth - common early in long, low-down-payment loans because cars depreciate fastest when new. It's dangerous because insurance pays market value if the car is totaled, leaving you paying for a car you no longer have. Gap insurance covers that difference.
Do I pay sales tax on the full price if I have a trade-in?
In most states, no - tax applies to the price minus your trade-in value, which is a real, often-overlooked benefit of trading in versus selling privately. A handful of states tax the full price regardless, so check your state's rule before comparing the two options.
Can I pay off a car loan early?
Almost always, and most auto loans have no prepayment penalty (verify yours). Extra payments go straight at principal and shorten the loan. Paying off early also frees you to drop to cheaper insurance coverage once the lender no longer requires full coverage.