Car Payment Estimator
Last reviewed: May 2026
Auto loans are amortized, meaning each payment covers both interest and principal. Early payments are more heavily weighted toward interest.[1] The total cost of a car loan depends on three factors: the loan amount (price minus down payment and trade-in), the interest rate, and the loan term. Even a small rate difference adds up: on a $30,000 loan, the difference between 6% and 8% over 60 months is approximately $1,600 in additional interest. Use the Car Payment Calculator for a quick estimate.
| Term | Monthly Payment | Total Interest | Total Paid |
|---|---|---|---|
| 36 months | $926 | $3,348 | $33,348 |
| 48 months | $718 | $4,486 | $34,486 |
| 60 months | $594 | $5,640 | $35,640 |
| 72 months | $511 | $6,810 | $36,810 |
| 84 months | $453 | $8,004 | $38,004 |
Auto loans are installment loans with fixed monthly payments over a set term, typically 36 to 84 months. Unlike mortgages, auto loans are secured by a depreciating asset — the car loses value while you're still paying for it. This creates a unique financial dynamic where you can end up owing more than the car is worth (being "underwater" or "upside-down") if the loan term is too long or the down payment too small1.
Auto loan rates depend primarily on your credit score, the loan term, and whether the car is new or used2. Average rates as of 2025: credit scores above 720 typically qualify for 5–6% on new cars; scores of 660–719 see 7–9%; scores below 660 may face 10–15% or higher. Used car rates run 1–2 percentage points higher than new car rates for the same credit profile.
Dealer financing often includes markup: the bank offers the dealer 5%, and the dealer marks it to 7%, keeping the 2% spread. This is negotiable — always compare dealer financing with pre-approved rates from your bank or credit union before signing.
On a $30,000 auto loan at 6.5% APR3:
48 months: $711/month, total interest = $4,137, total paid = $34,137.
60 months: $587/month, total interest = $5,224, total paid = $35,224.
72 months: $506/month, total interest = $6,397, total paid = $36,397.
84 months: $449/month, total interest = $7,660, total paid = $37,660.
The 84-month loan saves $262/month versus the 48-month loan, but costs $3,523 more in total interest. Worse, you'll be underwater on the loan for most of its term — after 3 years, you'll owe about $17,000 on a car worth roughly $15,000.
Financial advisors widely recommend the 20/4/10 rule for car buying4: put at least 20% down, finance for no more than 4 years, and keep total monthly car costs (payment + insurance + fuel + maintenance) under 10% of gross income. On a $75,000 gross income, that's $625/month maximum for all car-related expenses — which realistically means a car payment of $350–$400 after insurance and operating costs.
New cars lose approximately 20% of their value in the first year and roughly 15% per year for the next four years. A $35,000 new car is worth about $28,000 after year one and $14,000 after year five. Buying a 2–3 year old certified pre-owned vehicle lets someone else absorb the steepest depreciation while you get a nearly-new car with a warranty. The savings are typically 25–40% compared to buying new.
If your car is totaled or stolen while you owe more than it's worth, standard auto insurance only pays the current market value — not your loan balance. Gap insurance covers the difference. It's most important for buyers with small down payments, long loan terms, or cars that depreciate quickly. Cost is typically $20–40/year through your insurer (avoid the dealer's marked-up gap coverage).
If your credit score has improved since you got your loan, or if rates have dropped, refinancing can save significant money. Refinancing a $20,000 balance from 9% to 5.5% saves approximately $1,800 over a 48-month term. Most credit unions and online lenders offer auto refinancing with no fees. The process typically takes a few days and doesn't require visiting a dealer.
The car-buying process involves two separate negotiations that dealers deliberately blur: the price of the car and the financing terms. Always negotiate these separately. Agree on the purchase price first (use KBB, Edmunds, and TrueCar for fair market values), then discuss financing. Never answer "What monthly payment can you afford?" — this lets the dealer manipulate rate, term, and price to hit your number while maximizing their profit.
Get pre-approved from your bank or credit union before visiting the dealer. This gives you a baseline rate to beat. Then let the dealer try to match or beat it — captive finance arms (Ford Motor Credit, Toyota Financial) sometimes offer promotional rates below bank rates, especially on new vehicles. But always compare total cost, not just monthly payment.
Your car payment is only part of the monthly cost. A complete picture includes: insurance ($150–$300/month depending on vehicle, age, and driving record), fuel ($100–$250/month), maintenance ($75–$150/month averaged over time), registration and taxes ($50–$100/month amortized annually), and parking/tolls (varies by location). A $450/month car payment often means $800–$1,100/month in true ownership cost. If that exceeds 15% of your take-home pay, the car may be more than you can comfortably afford.
If you have the cash to buy a car outright, financing still sometimes makes sense — but only when the loan rate is lower than what your money would earn invested elsewhere. If you can get a 2.9% promotional rate and your investments earn 7%, the mathematical answer is to finance and invest the cash. But this only works if you actually invest the difference (most people don't) and can tolerate the risk that investments may underperform in the short term. For rates above 5%, paying cash almost always wins because the guaranteed savings exceed likely investment returns after taxes.
Leasing appears cheaper monthly but usually costs more over time. A $35,000 car leased at $350/month for 36 months costs $12,600 plus fees — and you own nothing at the end. Buying the same car with a $700/month payment for 60 months costs $42,000 total, but you own a vehicle worth approximately $14,000. The true 5-year cost of buying: $42,000 − $14,000 resale = $28,000. The true 5-year cost of leasing (two 3-year leases): roughly $25,200 + fees and higher insurance = ~$28,000–$30,000. The costs converge, but buying wins decisively if you keep the car beyond 5 years — ownership years 6–10 have zero payment with only maintenance costs.
→ Keep loans to 60 months or less. Shorter terms save thousands and avoid negative equity.[1]
→ Get pre-approved first. Walk into the dealer with a rate to beat.
→ Budget for total cost of ownership. Use the Fuel Cost Calculator to estimate ongoing expenses.
→ Consider 2-3 year old used cars. Avoid the steepest depreciation while getting a nearly-new vehicle.[2]
See also: Car Payment · Loan Calculator · Fuel Cost · Budget