Calculate your monthly car payment and compare loan terms side by side
Used car loans typically carry interest rates 1-2% higher than new car loans. If you are financing a used vehicle, consider adjusting the APR upward. For example, if new car rates average 6.5%, used car rates may be around 7.5-8.5%. Your actual rate depends on credit score, loan term, and lender.
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This auto loan calculator helps you estimate your monthly car payment before you visit the dealership. By entering the vehicle price, down payment, trade-in value, sales tax rate, and interest rate, you get an instant breakdown of what you will owe each month and how much total interest you will pay over the life of the loan. The term comparison table lets you see how choosing a shorter or longer loan changes your monthly payment and total cost side by side.
Enter the vehicle price, which is the sticker or negotiated price of the car. Subtract your down payment and any trade-in value to arrive at the amount you need to finance. Set the sales tax rate for your state (this varies from 0% to over 10% depending on location). Enter the annual percentage rate (APR) from your lender or use the default as a benchmark. Finally, select a loan term from 24 to 84 months. Results update instantly as you change any value.
APR (Annual Percentage Rate) represents the yearly cost of borrowing money, expressed as a percentage. Unlike a simple interest rate, APR can include certain fees, making it a more complete measure of your borrowing cost. When comparing loan offers from different lenders, always compare APR to APR for an apples-to-apples comparison. New car loans typically carry lower APRs than used car loans because the vehicle serves as collateral, and a newer car holds its value better.
A shorter loan term (24-48 months) means higher monthly payments but significantly less total interest paid. A longer term (60-84 months) lowers your monthly payment but increases total interest and raises the risk of becoming "upside down" on the loan, meaning you owe more than the car is worth. The comparison table in this calculator shows you the exact dollar difference, so you can make an informed decision that balances monthly affordability with long-term cost.
Get pre-approved by your bank or credit union before visiting the dealership, so you have a baseline rate to negotiate against. A larger down payment reduces your financed amount and may help you qualify for a lower rate. Avoid stretching your loan term beyond 60 months for new cars or 48 months for used cars, as the extra interest rarely justifies the monthly savings. Check the amortization schedule to see how each payment splits between principal and interest.
Used cars depreciate faster and carry more uncertainty about their condition, which represents higher risk for the lender. To compensate, lenders charge a premium of roughly 1-2% APR on used vehicle loans compared to new vehicles of the same loan term.
Financial experts generally recommend at least 20% down on a new car and 10% on a used car. A larger down payment reduces the loan amount, lowers your monthly payment, and helps you avoid negative equity where you owe more than the car is worth.
The amortization schedule breaks down each monthly payment into the portion that goes toward principal (reducing what you owe) and the portion that goes toward interest (the lender's profit). Early in the loan, interest takes a larger share. As the balance decreases, more of each payment goes toward principal.
Getting pre-approved from your own bank or credit union gives you a known rate to compare against the dealer's offer. Dealers sometimes mark up the rate from their lending partners, so having an outside offer gives you leverage to negotiate. Occasionally, manufacturers offer promotional 0% APR financing on new models, which can beat any bank rate.