Enter your budget to see what loan amount you can afford
See how different loan terms affect your monthly payment and total cost
Understanding what you can afford before visiting dealerships
Calculating how trade-in affects your new loan
Comparing different loan terms and interest rates
Fitting car payments into monthly budgets
Car loan payments are calculated using the amortization formula: M = P × [r(1+r)^n] / [(1+r)^n – 1], where P is the principal (loan amount), r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. Our calculator handles this math instantly for you.
Financial experts recommend the 20/4/10 rule: 20% down payment, 4-year (48-month) loan maximum, and total car expenses (payment + insurance + gas) under 10% of gross income. Alternatively, keep your car payment under 10-15% of your monthly take-home pay. Use our affordability calculator to find your budget.
Good car loan rates depend on your credit score. Excellent credit (750+): 3-6% APR. Good credit (700-749): 5-8% APR. Fair credit (650-699): 8-12% APR. Poor credit (below 650): 12-20% APR. New cars typically have rates 1-2% lower than used cars. Credit unions often offer better rates than banks or dealers.
A 60-month (5-year) loan is generally better than 72 months because: 1) You pay less total interest, 2) The loan doesn't exceed the car's useful life, 3) You're less likely to be "underwater" (owing more than the car is worth). Only choose 72 months if you need the lower payment and understand you'll pay more overall.
A $30,000 car loan at 6.5% APR would cost approximately: 36 months: $919/month ($3,090 total interest), 48 months: $711/month ($4,143 interest), 60 months: $587/month ($5,206 interest), 72 months: $506/month ($6,407 interest). The longer term means lower payments but significantly more interest paid.
Compare both options: Banks and credit unions often have lower rates, especially if you have good credit. Dealers may offer promotional rates (0% or low APR) on new cars but may have stricter requirements. Get pre-approved by your bank first, then see if the dealer can beat it. This gives you negotiating power.
Ideal down payment is 20% for new cars, 10% for used cars. Benefits of larger down payments: lower monthly payments, less interest paid, better loan approval chances, avoid being underwater. If you can't put 20% down, aim for at least 10% and consider gap insurance to protect against depreciation.
Yes, paying off your car loan early saves money on interest since interest is calculated on the remaining balance. However, check for prepayment penalties first (rare but some loans have them). Even small extra payments can significantly reduce total interest. Example: paying $50 extra monthly on a $25,000 loan saves hundreds in interest.
Car loans are installment loans where you borrow money to buy a vehicle and repay it in fixed monthly payments over a set term (usually 36-72 months). Each payment includes principal (loan amount) and interest. Early payments are mostly interest; later payments are mostly principal. The car serves as collateral - if you don't pay, the lender can repossess it.
Several factors affect your rate: 1) Credit score (most important), 2) Loan term (longer = higher rate), 3) New vs used car (new = lower rate), 4) Down payment amount, 5) Loan-to-value ratio, 6) Your income and employment, 7) Current market rates. Improve your rate by boosting credit score, making larger down payment, and choosing shorter terms.