How auto loan payments work
An auto loan is a fixed-rate amortizing loan: your payment stays the same every month, but the split between interest and principal shifts over the term. Early payments are mostly interest; later payments mostly chip away at the balance.
On a $35,000 auto loan at 7.5% for 72 months, your monthly payment is $605.15 and you pay $8,571 in total interest — about 24% of the original loan amount. A 48-month term on the same loan saves roughly $2,900 in interest at the cost of about $243 more per month.
The calculator is pre-filled with typical auto loan figures. Update the loan amount, rate, and term to match your deal. Use the “Pay it off faster” tab to see the effect of extra monthly payments on your payoff date and total interest.
Term length and the total cost of your car
Auto loan terms range from 24 to 84 months, with 60- and 72-month terms being the most common. Longer terms lower your monthly payment but increase the total interest you pay — and put you at risk of being underwater (owing more than the car is worth) as vehicles depreciate.
Cars depreciate roughly 15–20% in the first year and 10–15% per year thereafter. A brand-new $35,000 car may be worth $22,000–$25,000 after three years. On a 72-month loan you have repaid only about 40% of the principal by month 36 — leaving a gap between your payoff amount and the car’s market value. A shorter term or a larger down payment closes that gap faster.
The “Compare terms” mode lets you put two term lengths side by side — useful if you are deciding between a 48- and 60-month offer.
Dealer financing vs direct lender
Car dealers often offer financing through their captive lenders (the automaker’s finance arm). These rates can be competitive — especially during 0% promotional periods — but dealers earn a margin on the rate they offer you. Getting a pre-approval from your bank or credit union before you go to the dealership gives you a benchmark rate and negotiating leverage.
This calculator does not show current rates (that would require a live feed and daily maintenance). Enter the rate you have been offered — or the best rate you can find from your lender — and the calculator shows the exact payment and interest cost for that deal. Changing the rate field by 1% shows how much that rate negotiation is actually worth in dollar terms.
Frequently asked questions
How do I calculate my monthly car payment?
Your monthly auto loan payment is determined by three inputs: the loan amount, interest rate, and loan term. On a $35,000 auto loan at 7.5% for 72 months, the monthly payment is $605.15 and total interest paid is $8,571. Enter your own numbers in the calculator above to get your exact payment.
What is a good interest rate for an auto loan?
Auto loan rates vary with your credit score, loan term, and whether the car is new or used. Borrowers with excellent credit (720+) typically qualify for rates under 5% on new cars. Used car rates are higher — often 1–3% above new-car rates. Rates above 15% generally indicate subprime credit or a very long term on a used vehicle. This calculator is given-a-rate — for current rate ranges, check your bank, credit union, or lender directly.
Should I choose a 48-month or 72-month auto loan?
A shorter term means higher monthly payments but far less total interest. On a $35,000 / 7.5% loan: a 48-month term costs approximately $848/month and roughly $5,700 in total interest; the 72-month term costs $605/month but $8,571 in interest — about $2,900 more. If you can comfortably afford the higher payment, the shorter term is almost always better financially. Use the "Compare terms" mode to see both options for your specific loan.
What is the difference between auto loan and car finance?
These terms mean the same thing in different markets. In the US and Canada, borrowing to buy a car is called an auto loan or car loan. In the UK, it is called car finance or hire purchase (HP). In Australia, it is a car loan. The math is identical — fixed-rate amortization — regardless of what it is called. The currency switcher in the calculator adjusts the symbol and vocabulary to match your market.
How much car can I afford?
A commonly cited rule is to keep total vehicle costs (payment + insurance + fuel + maintenance) under 15–20% of your take-home pay. For a $4,000/month take-home, that is $600–$800/month total. At $605/month for a $35,000 / 7.5% / 72-month loan, that fits the 15% threshold — but insurance and running costs will add $200–$400/month on top. Use this calculator to find the maximum loan amount your target payment supports.
What this calculator computes — and what it does not
This calculator models fixed-rate, fully amortizing loans using the standard amortization formula. A number of real-world factors are outside its scope.
- 1.Results are estimates, not guarantees. Actual loan costs depend on the exact terms in your loan agreement, any fees charged at origination, how the lender applies payments, and whether you make every payment exactly on schedule. This calculator assumes all payments are made on time with no changes.
- 2.Interest rates are user-supplied, not live market data. This tool does not connect to any rate feed. The rate you enter should come from a lender quote or your loan agreement. Current rates vary by lender, credit score, loan type, and market conditions — this calculator cannot provide those figures.
- 3.Property taxes, insurance, and PMI are excluded unless toggled on. The payment computed here is principal and interest only. For a mortgage, your total monthly obligation includes property taxes, homeowners insurance, and PMI (if your down payment is under 20%) — collected in escrow by most lenders. These can add $200–$800 or more per month to the P&I payment shown.
- 4.APR vs. interest rate. This calculator uses the stated interest rate for payment math. APR (Annual Percentage Rate) is always higher than the interest rate because it spreads lender fees over the loan term. APR is the correct metric for comparing loan costs across lenders; the stated rate is the correct input for computing the payment schedule.
- 5.Variable-rate loans cannot be accurately projected. This calculator models fixed-rate amortization only. For adjustable-rate mortgages (ARMs), tracker mortgages, or variable-rate personal loans, the payment changes when the rate resets — the full-term projection would require assumptions about future rates that cannot be known in advance.
This calculator is for educational and planning purposes only. It does not constitute financial, mortgage, or legal advice.