Car Payoff Calculator
Calculate your monthly payment, total cost, and see how extra payments save you money
How Car Loan Payments Are Calculated
Example: You want to buy a $28,000 car. You put $3,000 down, trade in your old car worth $4,000, and your state charges 8% sales tax. Your loan amount is $28,000 − $3,000 − $4,000 + $2,240 (tax) = $23,240. At 6.5% APR for 60 months, your monthly payment is $454/month.
Key insight: Adding just $50–$100 extra per month can cut months off your loan and save hundreds in interest. Use the extra payment field above to see your exact savings.
Loan Term Comparison — $25,000 at 6% APR
See how choosing a shorter or longer term changes your payment and total cost:
| Term | Monthly Payment | Total Interest | Total Paid |
|---|---|---|---|
| 24 months | $1,108/mo | $592 | $25,592 |
| 36 months | $760/mo | $1,360 | $26,360 |
| 48 months | $587/mo | $1,178 | $26,178 |
| 60 months | $483/mo | $1,999 | $26,999 |
| 72 months | $414/mo | $2,832 | $27,832 |
| 84 months | $364/mo | $5,576 | $30,576 |
84-month loans (7 years) are risky — your car depreciates faster than you pay it off, leaving you "underwater" for years. Stick to 48–60 months when possible.
Down Payment Impact — $30,000 Car at 6.5% APR / 60 Months
A bigger down payment dramatically reduces your total interest cost:
| Down Payment | Loan Amount | Monthly Payment | Total Interest |
|---|---|---|---|
| $0 (0%) | $30,000 | $586/mo | $5,160 |
| $3,000 (10%) | $27,000 | $527/mo | $4,644 |
| $6,000 (20%) | $24,000 | $469/mo | $4,128 |
| $9,000 (30%) | $21,000 | $410/mo | $3,612 |
| $12,000 (40%) | $18,000 | $352/mo | $3,096 |
The recommended minimum down payment is 20% for new cars and 10% for used cars. This keeps you above water as the car depreciates.
Car Loan Rates by Credit Score (2024)
| Credit Score | Rating | New Car APR | Used Car APR |
|---|---|---|---|
| 750+ | Excellent | 3.5% – 5.5% | 4.5% – 7% |
| 700–749 | Good | 5.5% – 7.5% | 7% – 10% |
| 650–699 | Fair | 10% – 14% | 12% – 18% |
| 600–649 | Poor | 14% – 20% | 18% – 25% |
| <600 | Bad | 20% – 30%+ | 25% – 35%+ |
Get pre-approved from your bank or credit union before visiting the dealership. It gives you a rate benchmark and stronger negotiating power. Credit unions often beat bank rates by 1–2%.
New Car vs. Used Car Loan: What's the Difference?
| Factor | New Car | Used Car |
|---|---|---|
| Typical APR | 3.5% – 7.5% | 5% – 18% |
| Depreciation | 15–20% in year 1 | Already depreciated |
| Manufacturer deals | 0% APR possible | Rarely available |
| Insurance cost | Higher | Lower |
| Warranty | Full factory warranty | Limited / CPO only |
| Maintenance risk | Low | Higher (unknown history) |
A certified pre-owned (CPO) car from a manufacturer gives you near-new reliability at a used-car price — often the best value. Look for CPO programs from major brands.
True Cost of Owning a Car (Annual)
Your monthly payment is just one part of owning a car. Here's the full picture for a typical $30,000 vehicle:
Most financial experts recommend keeping total car costs under 15–20% of take-home pay. On a $6,000/month income, that's $900–$1,200 total — not just the car payment.
Should You Take a 0% APR Deal?
Manufacturers sometimes offer 0% APR promotions on new cars. These can be a great deal — but only if you qualify and don't need cash back.
0% APR is almost always the better deal if you plan to keep the car for the full term and have strong enough credit to qualify. Never sacrifice the 0% deal just to get a lower sticker price.
When Should You Refinance Your Car Loan?
Refinancing replaces your current loan with a new one — ideally at a lower rate. It makes sense when:
Refinancing a $20,000 loan from 12% to 7% APR with 36 months remaining saves about $1,700 in interest. Check rates at your bank, credit union, and online lenders like LightStream or PenFed.
Frequently Asked Questions
How much car can I afford?
Keep your car payment under 15% of monthly take-home pay, and total car costs (payment + insurance + gas + maintenance) under 20%. On a $5,000/month income, aim for a payment under $750 and total costs under $1,000.
Is it better to finance through a dealer or bank?
Banks and credit unions typically offer lower rates than dealer financing. Credit unions often have the best rates. However, manufacturers sometimes offer 0% APR promotions that beat outside financing — always compare before signing.
What happens if I pay off my car loan early?
You save on interest and own the car outright sooner. Most auto loans have no prepayment penalty. Paying off your loan early slightly reduces your credit score temporarily (closing an account), but the financial savings far outweigh this.
What is a good car loan term?
48–60 months is generally ideal for most buyers. It balances a manageable monthly payment against a reasonable total interest cost. Avoid 72–84 month loans unless absolutely necessary — the extra interest and depreciation risk aren't worth the lower payment.
How does a trade-in reduce my loan?
Your trade-in value is subtracted from the purchase price before calculating the loan. Trading in a $5,000 car is identical to adding $5,000 to your down payment. Get quotes from CarMax, Carvana, and the dealer — take the highest offer.
What credit score do I need for a car loan?
You can get a car loan with almost any credit score, but a score below 600 will result in very high rates (18–30%+ APR). A score of 700+ unlocks competitive rates. Check and improve your credit before applying if possible.
Should I buy or lease a car?
Buying is better if you drive over 15,000 miles/year, want to own the car long-term, or want to customize it. Leasing offers lower monthly payments but you never build equity. Most financial advisors recommend buying if you can afford it.
What is negative equity on a car loan?
Negative equity (being "underwater") means you owe more on your loan than the car is worth. This happens when depreciation outpaces your loan payoff — common with long loan terms and small down payments. If you sell or total the car, you'd still owe the remaining balance.
Can I get a car loan with no down payment?
Yes, many lenders offer 0% down financing, especially for new cars with strong credit. However, no-down-payment loans carry higher monthly payments and put you at risk of negative equity quickly. At minimum, try to put down enough to cover sales tax and fees.
What fees are not included in the car price?
Besides the sticker price, expect: sales tax (varies by state, typically 5–10%), dealer documentation fee ($100–$500), title and registration fees ($50–$300), and possibly a destination charge on new cars. Always ask for the "out-the-door" price before calculating your loan.
Is a fixed or variable APR better for a car loan?
Almost all auto loans use a fixed APR — your rate stays the same for the life of the loan. Variable-rate auto loans are rare and generally not recommended because your payment can change. Always confirm your loan has a fixed rate before signing.
How does my debt-to-income ratio affect my car loan?
Lenders look at your debt-to-income (DTI) ratio — monthly debt payments divided by gross monthly income. Most lenders prefer a DTI under 36–43%. Adding a large car payment to existing debt can push your DTI too high, leading to rejection or higher rates.