US Auto Loan Calculator
Estimate your monthly car payment, total interest, and true cost of any auto loan.
Amortisation Schedule
| Month | Payment | Principal | Interest | Balance |
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How Auto Loan Interest and Monthly Payments Work
How monthly payments are calculated
Monthly payment = P × r ÷ (1 − (1+r)^−n), where P is the loan amount, r is the monthly rate (APR ÷ 12), and n is the number of months. Early payments are mostly interest; later payments are mostly principal — this is amortisation.
APR vs interest rate
APR (Annual Percentage Rate) includes both the interest rate and any lender fees, making it the true cost of borrowing. Always compare APRs when shopping for finance — a lower headline rate with high fees can cost more overall than a higher APR with no fees. The interest rate calculator reverse-calculates the implied rate from any quoted monthly payment.
Down payment benefits
A larger deposit reduces the amount financed, lowering your monthly payment and total interest paid. It also reduces the risk of negative equity — owing more than the car is worth — since vehicles depreciate sharply in the first 1–2 years. The finance calculator can model the overall cost difference at various deposit amounts.
Loan term trade-off
A longer term means a lower monthly payment but significantly more interest paid overall. For example, a 7-year loan at 7% costs far more in interest than a 4-year loan on the same amount. Use the amortisation schedule above to compare the true total cost.
Worked example
Vehicle price £25,000 with a £3,000 deposit, no trade-in, at 6.9% APR over 48 months: the loan amount is £22,000, giving a monthly payment of £527. Total interest paid over the term is £2,296, bringing the total cost of the vehicle to £27,296.
Frequently Asked Questions
How is a monthly car payment calculated?
Monthly payment uses the amortisation formula: PMT = P × r ÷ (1 − (1+r)^−n), where P is the loan amount, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. Early payments are mostly interest; later payments are mostly principal.
What is the difference between APR and interest rate?
The interest rate is the base rate used to calculate your payment. APR includes the interest rate plus lender fees and charges — the true annual cost. Always compare APRs when shopping for car finance, as a low headline rate with high fees can cost more than a higher APR with no fees.
How does a down payment affect my car loan?
A larger down payment reduces the amount financed, lowering both your monthly payment and total interest paid. It also reduces the risk of negative equity — owing more than the car is worth — since vehicles typically depreciate by 15–25% in the first year.
Is a longer or shorter loan term better?
A longer term reduces your monthly payment but significantly increases total interest paid. Compare the total cost (monthly payment × number of months) rather than just the monthly amount when choosing a term to see the true long-term difference.
Evidence & Methodology
How This Page Is Grounded
Method
Uses the standard fixed-rate instalment-loan formula and separates each payment into interest and principal.
Important limitation: Taxes, registration, dealer fees, rebates and lender-specific APR treatment vary and must be entered correctly.
Primary Sources
- Auto loan key terms Consumer Financial Protection Bureau
- How mortgage amortization works Consumer Financial Protection Bureau
Quality Checks
Payment and amortisation totals are checked against worked loan examples.
See how sources are selected and corrections are handled in our Editorial & Calculation Methodology, and which automated checks this page has to pass in How We Test.