Car Loan Calculator
Estimate auto loan payments and borrowing cost.
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Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
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What is a Car Loan?
A car loan is a secured loan used to purchase a vehicle, where the vehicle itself serves as collateral. You borrow a specific amount and repay it with interest over a set term (typically 36-84 months). If you fail to make payments, the lender can repossess the vehicle.
Car Loan Payment Formula
Monthly Payment = P * [r(1+r)^n] / [(1+r)^n - 1], where P = loan amount (vehicle price minus down payment and trade-in), r = monthly interest rate (APR / 12 / 100), and n = total number of monthly payments. This is the same amortization formula used for mortgages.
New vs Used Car Loans
New car loans typically offer lower rates (4-7% for good credit) and longer terms (up to 84 months). Used car loans have higher rates (5-10%) and shorter maximum terms (up to 72 months). New cars depreciate faster initially; used cars offer better value but may have higher maintenance costs.
How to Get the Best Auto Loan Rate
Check your credit score before shopping (fix errors if needed). Get pre-approved by a bank or credit union before visiting the dealer. Compare offers from at least three lenders. Consider shorter loan terms for lower rates. Avoid dealer financing markup by bringing your own pre-approval.
Common Car Loan Mistakes
Focusing only on monthly payment (dealers can extend term to lower payment while increasing total cost). Not checking credit score before shopping. Skipping pre-approval. Choosing the longest term possible (leads to negative equity). Not factoring in insurance, maintenance, and fuel costs.
Comparison Analysis
Loan Term Comparison ($30,000 at 6% APR)
| Criteria | 36 Months | 48 Months | 60 Months | 72 Months |
|---|---|---|---|---|
| Monthly Payment | $912 | $705 | $580 | $493 |
| Total Interest | $2,843 | $3,827 | $4,807 | $5,503 |
| Total Cost | $32,843 | $33,827 | $34,807 | $35,503 |
| Risk of Negative Equity | Low | Moderate | Moderate | High |
New vs Used Car Loan
| Criteria | New Car Loan | Used Car Loan |
|---|---|---|
| Interest Rate (Good Credit) | 4-7% | 5-10% |
| Maximum Term | Up to 84 months | Up to 72 months |
| Depreciation | 20-30% first year | Slower depreciation |
| Warranty | Full manufacturer warranty | Limited or no warranty |
Content Verification
Expert Review
Reviewed by Marcus Johnson, Certified Automotive Finance Professional, NMLS Licensed
Authoritative Sources
Based on CFPB guidelines, Federal Reserve auto loan data, and industry standards
Last Reviewed
Content verified May 2026 against current auto loan rates and lending practices