How to use this car loan calculator
Start with the deal in front of you. Results update instantly, so you can test a different car, term or rate while you are still at the dealership.
- Vehicle price: the agreed price of the car before tax and fees.
- Down payment / deposit and Trade-in value: both come off the amount you borrow. The hint under the down payment shows it as a percentage of the price.
- Interest rate: the yearly rate you have been offered. Try quotes from your bank or credit union as well as the dealer.
- Loan term: 36 to 84 months. The results compare your choice with the next shorter term.
- More options: add what you still owe on your trade-in, your sales tax rate, any fees added to the loan and an optional balloon due at the end.
You will see the monthly repayment, the amount financed, the total interest and the all-in cost of the car: price, tax, fees and interest added together. The chart tracks your loan balance month by month, and the schedule summarizes each year.
How car loan repayments are calculated
First, the calculator works out how much you are actually borrowing:
A = price + sales tax + fees + owed on trade-in − down payment − trade-in value A = amount financed. Sales tax is charged on the price, or on the price minus your trade-in, depending on the toggle.
Then it finds the repayment that clears that amount, leaving any balloon to be paid with the final repayment:
M = (A − B ÷ (1 + r)n) × r ÷ (1 − (1 + r)−n) M = monthly repayment · B = balloon · r = yearly rate ÷ 12 · n = number of months
Without a balloon, B is zero and this is the standard loan formula. With one, the balloon is discounted back to today's value, because you do not repay it until the end. Your repayments cover the rest of the loan, plus interest on the full balance, including the balloon, every month.
Worked example
You agree a price of $35,000, put $4,000 down and trade in a car worth $3,000. That leaves $28,000 to finance. At 7% over 60 months, the monthly rate is 0.07 ÷ 12 = 0.583%, which gives a repayment of $554.43.
Sixty repayments add up to $33,266, so you pay $5,266 in interest. The car's all-in cost is $35,000 + $5,266 = $40,266. Choosing 48 months instead raises the repayment by about $116, to $670.49, but cuts the interest to $4,184, a saving of $1,082.
Now add a 30% balloon, $10,500. The repayment falls to $407.77, but total interest rises to $6,966, which is $1,700 more, and you still owe the $10,500 with your last repayment.
Choosing a loan term
Here is the same $28,000 at 7% across the usual terms:
| Term | Monthly repayment | Total interest | All-in cost of the car |
|---|---|---|---|
| 36 months | $864.56 | $3,124 | $38,124 |
| 48 months | $670.49 | $4,184 | $39,184 |
| 60 months | $554.43 | $5,266 | $40,266 |
| 72 months | $477.37 | $6,371 | $41,371 |
| 84 months | $422.60 | $7,498 | $42,498 |
Going from 60 to 84 months lowers the repayment by about $132 but adds $2,232 of interest. There is a second cost too. Cars lose value fastest in their first few years, while a long loan pays down slowly, so you can spend years owing more than the car is worth. That is called negative equity, or being upside down on the loan, and it becomes a problem if you want to sell or the car is written off.
Balloon payments: lower repayments, higher cost
A balloon or residual is a lump sum left owing at the end of the loan, set as a percentage of the price. Balloons are common in Australian car finance, and UK PCP deals work in a similar way with a guaranteed future value. They make a car look affordable month to month, but you pay interest on the balloon amount for the whole term because it is never paid down.
When the balloon falls due, you usually have three choices:
- Pay it in cash and own the car outright.
- Refinance it into a new loan, which means more interest on a car that is now several years old.
- Sell or trade in the car and use the proceeds, which only works if the car is worth at least the balloon.
Tip: only take a balloon if you are confident you will have the cash at the end, or the car will be worth more than the balloon. If you need it just to make the repayment fit, the car is probably too expensive for your budget.
Trade-ins, negative equity and sales tax
Your trade-in works like a down payment, but only for the part you own. If you still owe money on it, the dealer pays off the old loan and adds that amount to your new one. Say your $3,000 trade-in still has $6,000 owing. You have $3,000 of negative equity, the amount financed rises to $34,000 and the repayment to $673.24. Rolling that shortfall in adds about $59 to every repayment, and you pay interest on it for five years.
In the US, sales tax on a car is usually charged on the price minus your trade-in, which is why trading in at the dealer can save tax compared with selling privately. A few states, including California, tax the full price instead, so use the toggle under "More options". On the example, a 7% tax on the $32,000 taxable amount adds $2,240 and lifts the repayment to $598.79. Taxed on the full price, it would be $2,450 and $602.95.
Outside the US, taxes such as GST or VAT are normally included in the advertised price, so leave the sales tax at 0. Add stamp duty, registration or dealer delivery charges as fees if you are rolling them into the loan.
Before you sign
- Get a loan quote from your bank or credit union before visiting the dealer, so you know whether the dealer rate is competitive.
- Negotiate the car's price first, then the finance. Mixing them makes it harder to see what each part costs.
- Compare dealer finance with an unsecured option using the personal loan calculator, which includes fees in the APR, or put two quotes side by side with the loan comparison calculator.
- Ask for the total cost in writing, including every fee and add-on. Extended warranties and insurance rolled into the loan attract interest too.
- For a plain loan without a trade-in or balloon, the loan calculator shows a payment-by-payment schedule.
Frequently asked questions
How much car can I afford?
Is a 72 or 84-month car loan a bad idea?
What is a balloon payment on a car loan?
Should I roll negative equity into my new car loan?
Is 0% dealer finance really free?
How much does a bigger down payment save?
This calculator gives estimates for education and planning. It is not financial advice, and your lender's figures may differ. See how we calculate.