How is a car loan payment calculated?

Car loan payments are calculated using the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n – 1], where M is the monthly payment, P is the principal (loan amount), r is the monthly interest rate, and n is the number of payments.

What is a good interest rate for a car loan?

As of 2024, good interest rates for new car loans range from 4% to 7% APR for borrowers with excellent credit (750+). Used car loans typically run 1-2% higher. Rates vary significantly based on credit score, loan term, and lender.

Should I choose a shorter or longer loan term?

Shorter loan terms (36-48 months) have higher monthly payments but lower total interest. Longer terms (60-84 months) reduce monthly payments but significantly increase total interest paid. Most financial experts recommend keeping auto loans under 60 months.

Calculate Your Monthly Car Payment

Estimate your auto loan payments, compare different terms, and see the full amortization schedule — all in one place.

Loan Details

Vehicle Price MSRP or negotiated price

Down Payment 14.3%

Trade-in Value Optional

Interest Rate (APR) 7.0%

0% 25%

Loan Term

Estimated Monthly Payment

$594¹²

for 60 months at 7.0% APR

Loan Amount $30,000

Total Interest $5,647

Total Cost of Loan $35,647

Payment Breakdown

84%

Principal

Principal ($30,000)

Interest ($5,647)

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Amortization Schedule

Month	Payment	Principal	Interest	Balance

Frequently Asked Questions

How is my car payment calculated?

Your monthly payment is calculated using the standard amortization formula, which factors in your loan amount, interest rate, and term length. The formula ensures equal monthly payments throughout the loan.

What’s a good interest rate for a car loan?

Good rates typically range from 4-7% APR for new cars if you have excellent credit (750+). Used car loans usually run 1-2% higher. Your actual rate depends on credit score, loan term, and lender.

Should I choose a longer loan term?

Longer terms (60-84 months) mean lower monthly payments but significantly more interest paid overall. Financial experts recommend keeping auto loans under 60 months when possible.

How much should I put down?

Most experts recommend 10-20% down. A larger down payment reduces your loan amount, monthly payments, and total interest — plus helps you avoid being “underwater” on the loan.