Before you sign at the dealer, it helps to know your real monthly payment — and how the loan term and down payment change it. Here’s how a car loan is calculated and how to check any deal.
🚗 Open the free Auto Loan CalculatorMonthly payment, total interest and the full scheduleA car loan is a standard fixed-rate loan, so four things set the monthly payment:
| Input | Effect on the payment |
|---|---|
| Amount financed (price − down payment − trade-in) | Higher amount → higher payment |
| Interest rate (APR) | Higher rate → higher payment and much more total interest |
| Loan term (months) | Longer term → lower monthly payment, but more interest overall |
| Down payment / trade-in | More down → smaller amount financed → lower payment |
It’s the same amortization formula used for any fixed-rate loan:
M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]
where P is the amount financed, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. You don’t need to do this by hand — the calculator does it and shows the month-by-month breakdown.
Example: a $25,000 car with $5,000 down means you finance $20,000. At 7% APR over 5 years (60 months), that’s about $396 per month and roughly $3,760 in total interest.
Does this include tax, title and fees?
The payment shown is principal and interest. Add taxes and dealer fees to the amount financed if they’re rolled into the loan.
What about a longer 72- or 84-month loan?
You can enter any term. The monthly drops, but check how much extra total interest you pay — it’s often a lot.
Is APR the monthly rate?
No. APR is annual. Divide by 12 for the monthly rate the formula uses.
Are my numbers uploaded?
No. Everything is calculated in your browser.