How it Works
Uses the standard amortization formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]. P is loan amount (Price - Down Payment - Trade In), i is monthly interest rate, n is months.
What is Auto Loan Amortization Calculator?
Determines the monthly payment required to finance a vehicle, breaking down principal vs interest over the loan term. It helps buyers understand the true cost of borrowing.
Step-by-Step Guide
- 1 Loan Amount
- Vehicle Price minus Down Payment/Trade-in.
- 2 Interest Rate
- Annual Percentage Rate (APR).
- 3 Term
- Loan duration in months (e.g., 60, 72).
- 4 Calculate
- View monthly payment & total interest.
Example
Input: $30k Loan, 5% APR, 60mo
Result: $566/mo, $3,968 Interest
FAQ
How do I include sales tax?
Calculate tax on the full car price, then add it to the loan amount.
What is a good APR?
Depends on credit score; generally 3-6% for new cars, higher for used.
Does trade-in reduce tax?
In many states/regions, yes. Subtract trade-in value before calculating tax.
72 or 84 month loans?
Risky. You may become 'upside down' (owe more than the car is worth).
Extra payments?
Paying extra goes to principal, reducing interest and shortening the term.
Conclusion
While extending the loan term lowers your monthly payment, it drastically increases the total interest paid. Use this tool to find the sweet spot between affordability and total cost.