How is a car loan payment calculated?

A car loan uses the same amortization formula as any fixed-rate loan: M = P·r / (1 − (1 + r)^−n), where P is the amount financed (price minus down payment), r is the monthly interest rate (APR ÷ 12), and n is the number of months.

How much should I put down on a car?

A down payment of 10–20% of the car's price is recommended. A larger down payment reduces the amount financed, lowers your monthly payment, decreases total interest, and helps avoid owing more than the car is worth.

What is a good interest rate for a car loan?

Average new car loan rates range from about 5% to 9% APR depending on credit score, term length and lender. Used car rates are typically 1–2% higher. Buyers with excellent credit (750+) may qualify for rates below 5%.

Is this car loan calculator free?

Yes, it is free, needs no sign-up, and runs entirely in your browser — your numbers are never sent to a server.

Car Loan Calculator — Monthly Payment

How a car loan works

When you finance a car, the lender gives you a fixed interest rate (APR) and a set term — typically 3 to 6 years. Each monthly payment covers that month's interest first, and the rest reduces the principal. Early in the loan, a larger share goes to interest; as the balance drops, more of each payment reduces what you owe.

The formula

M = P · r ÷ (1 − (1 + r)⁻ⁿ)

where M is the monthly payment, P the amount financed (price minus down payment), r the monthly rate (APR ÷ 12) and n the number of months. This calculator simulates the loan month by month — add extra payments to see how much interest you save.

Down payments matter

A larger down payment reduces the amount you borrow, which means lower monthly payments and less total interest. It also helps you avoid being "upside down" — owing more than the car is worth — since new cars lose roughly 20% of their value in the first year.

New vs used car rates

Used car loans typically carry interest rates 1–2 percentage points higher than new car loans. The best rates go to buyers with credit scores above 720. If your credit score is below 620, you may want to consider a shorter term or a larger down payment to keep total interest manageable.

Related calculators

Compare auto financing options with the general loan payoff calculator. For home loans, try the mortgage payoff calculator or rent vs buy calculator. See how compound interest works on savings instead.

Frequently asked questions

How is a car loan payment calculated?: Using the amortization formula above — each payment covers that month's interest first, then reduces the principal balance.
How much should I put down?: 10–20% of the car's price is recommended. A larger down payment lowers your payment and total interest.
What is a good interest rate?: New car rates range from about 5% to 9% APR. Used car rates are typically 1–2% higher. Excellent credit (750+) can get below 5%.
Should I finance through the dealer or a bank?: Always compare. Dealers may offer convenience but banks or credit unions often have lower rates. Get pre-approved before visiting the dealership.
Is this calculator free?: Yes, free, no sign-up, runs entirely in your browser.

Car Loan Calculator