Car Loan Calculator

How Auto Loan Payments Work

Auto loans use simple interest amortization. Each payment covers interest accrued since the last payment, with the remainder reducing the principal. Early payments are mostly interest; later payments are mostly principal. This is why paying extra early in the loan saves the most money — you reduce the principal on which interest compounds.

What APR Should I Expect?

APR depends heavily on your credit score. Excellent credit (750+): 4–6%. Good credit (700–749): 6–8%. Fair credit (650–699): 8–12%. Poor credit (below 650): 12–20%+. New vehicles typically qualify for lower rates than used cars. Manufacturer financing promotions can offer 0–2.9% APR on new vehicles.

Should I Choose a Longer or Shorter Term?

A 60-month loan vs. a 72-month loan on $28,000 at 6.5% APR saves about $1,200 in total interest. The tradeoff: lower monthly payments vs. more total cost and longer negative equity exposure. Financial advisors generally recommend keeping car loans to 48–60 months and keeping the payment under 10–15% of take-home pay.

Trade-In and Negative Equity

If you owe more on your current car than it's worth (negative equity / underwater), avoid rolling that balance into a new loan — it compounds the problem. Instead, pay down the difference before purchasing or wait until equity turns positive. A substantial down payment (10–20% of vehicle price) avoids negative equity from the start.