Car Loan Calculator
A car loan is repaid in fixed monthly installments that combine interest and principal repayment, just like a mortgage but over a much shorter term.
- Monthly payment via amortization
- Total interest and total cost
- Supports 0% (interest-free finance)
Car Loan Calculator
Enter your numbers and press Calculate
How a car loan payment is calculated
The calculation follows four closed-form steps:
Amount financed P = car price - down payment
Monthly rate r = annual rate / 12 (the annual rate in % is divided by 100 and by 12)
Monthly payment = P x r / (1 - (1 + r)^-n), where n is the number of months. If the rate is 0%, the payment is simply P / n.
Total interest = payment x n - P, and total cost = payment x n + down payment.
This is the amortization or annuity formula, the universal standard for constant-payment loans used by banks and auto lenders worldwide. You pay the same installment every month; at the start most of it is interest, and as the balance falls a growing share repays principal.
Worked example: a 30,000 car, a 5,000 down payment, a 5% annual rate and a 60-month term. P = 30,000 - 5,000 = 25,000. r = 5 / 100 / 12 = 0.0041667. Payment = 25,000 x 0.0041667 / (1 - (1.0041667)^-60) = 471.78. Total interest = 471.78 x 60 - 25,000 = 3,306.85. Total cost = 471.78 x 60 + 5,000 = 33,306.85.
Source: the standard amortizing-loan payment formula (present value of an annuity / constant-installment method), identical to the PMT function in spreadsheets. This is an indicative estimate and not a finance offer.
Car finance examples
Four scenarios computed with the exact same formula the tool uses:
- Classic purchase: a 30,000 car, 5,000 down, 5% annual over 60 months. Amount financed 25,000. Payment = 471.78. Total interest = 3,306.85. Total cost with down payment = 33,306.85.
- Pricier family car: a 45,000 vehicle, 10,000 down, 6.5% over 72 months. Amount financed 35,000. Payment = 588.35. Total interest = 7,361.02. Longer terms cut the payment but balloon the interest.
- Interest-free finance (manufacturer 0%): a 20,000 car, no down payment, 0% over 48 months. Payment = 416.67 (20,000 / 48). Total interest = 0. The payment is just the principal split evenly.
- Premium car over a long term: a 60,000 vehicle, 15,000 down, 7.99% over 84 months. Amount financed 45,000. Payment = 701.16. Total interest = 13,897.06. Over 7 years the car costs nearly 14,000 more in interest alone.
The pattern is clear: a larger down payment lowers the amount financed and therefore the payment and the interest; a longer term lowers the monthly payment but raises the total interest you pay for the car.
How to use the calculator step by step
Step 1: enter the vehicle price. Use the negotiated sale price, not the sticker price; if there are discounts or a trade-in, subtract them first so the figure reflects what you will actually finance.
Step 2: enter the down payment you put in from your own pocket. The larger it is, the smaller the amount financed and therefore the payment and the interest. If you make no down payment, leave it at 0.
Step 3: enter the annual interest rate as a percentage. Use the nominal rate the lender quotes; if it is a manufacturer 0% offer, enter 0 and the tool will spread the principal with no interest.
Step 4: choose the term in months (for example 36, 48, 60, 72 or 84). A longer term lowers the monthly payment but makes you pay more interest overall.
Step 5: review the results: the monthly payment, the amount financed, the total interest and the total cost with the down payment included. Compare several terms to see the trade-off between a comfortable payment and total cost.
Important notice: this calculator provides an indicative estimate for informational and educational purposes only. It is not financial advice or a credit offer. The real contract may include origination fees, insurance, a residual or balloon value and an APR different from the nominal rate, so the final payment may vary. Always check your lender's binding offer before signing.
About this calculator
This calculator estimates how much you will pay each month and how much the vehicle credit will cost you in total. It first subtracts the down payment from the car price to get the amount financed; then it applies the standard amortization formula (the constant-payment or annuity method) to spread that amount into equal installments over the term, using the monthly interest rate. Enter the vehicle price, the down payment you put in, the annual interest rate (APR/nominal rate) and the term in months, and you instantly get the monthly payment, the total interest you will pay over the whole life of the loan and the total cost (down payment included). This is an indicative estimate: the real contract may include origination fees, bundled insurance or a residual value that this tool does not account for.
Frequently asked questions
How is a car loan payment calculated?
It uses the standard amortization formula: payment = P x r / (1 - (1 + r)^-n), where P is the amount financed (price minus down payment), r is the monthly rate (annual rate / 12, in decimal) and n is the number of months. This is the same constant-payment method banks and lenders apply and the PMT function in spreadsheets. If the rate is 0%, the payment is simply P / n. This calculator applies exactly that formula to the figures you enter.
Is a bigger down payment or a longer term better?
They are opposite levers. A bigger down payment reduces the amount financed, so it lowers both the payment and the total interest: it always saves you money. A longer term lowers the monthly payment and makes it more comfortable, but because you pay interest for longer, the total cost rises. Rule of thumb: put down as much as you can and pick the shortest term whose payment fits your budget. Try several combinations in the calculator to see the effect on total interest.
Does the calculator work for manufacturer 0% finance?
Yes. If you enter a 0% interest rate, the tool detects the special case and splits the amount financed evenly: payment = amount financed / number of months, with total interest of 0. That is exactly what happens in an interest-free finance promotion. Note that some 0% offers replace a cash discount: if you give up that discount, the effective cost is not truly zero; compare it by lowering the price in the discounted option.
Why does my bank's real payment differ from this result?
This tool computes the pure amortization payment with the rate you enter. A real contract usually adds an origination fee, bundled insurance (life, unemployment), administration costs and sometimes a residual or balloon final payment that changes the split. Banks also quote the APR, which includes those fees and is usually higher than the nominal rate. That is why the payment or cost can differ. Use this result to compare offers and budget, but rely on the lender's binding offer for the exact figure.
Is this calculator's result exact?
The mathematics is exact for the standard amortization formula: with the same inputs it gives the same payment as any bank or the PMT function in a spreadsheet. What is indicative is the context: it relies on the rate you enter being the real one, assumes equal monthly payments with no grace period, and excludes fees, insurance and residual value. For a buying decision, use the tool to compare scenarios and then ask your lender for the binding APR offer. This is not financial advice.