What will your auto loan cost per month — and how much total interest will you pay over the full term?
This tool is for: Car buyers comparing financing options before visiting a dealership or applying with a lender · Borrowers evaluating how a trade-in or larger down payment affects the monthly payment and total cost · Anyone choosing between a shorter term with higher payments and a longer term with lower payments on a vehicle loan
- The exact amount you will need to finance after applying your down payment and trade-in
- Your monthly principal-and-interest payment for any loan amount, rate, and term
- The total interest paid over the life of the loan
- The total amount repaid across all monthly payments
Formulas Used
Amount Financed
Amount Financed = Vehicle Price - Down Payment - Trade-In Value
Where: Amount Financed = The loan principal on which interest accrues (USD), Vehicle Price = Agreed purchase price of the vehicle (USD), Down Payment = Cash paid upfront at purchase (USD), Trade-In Value = Credit applied from trade-in vehicle (USD)
Source: Consumer Financial Protection Bureau — Auto loans ✓ Verified
Monthly Payment (Fixed-Rate Amortization)
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where: M = Monthly principal-and-interest payment (USD), P = Amount financed (loan principal) (USD), r = Monthly interest rate (annual rate / 100 / 12) (decimal), n = Loan term in months (months)
Source: Consumer Financial Protection Bureau — How does my loan payment get applied? ✓ Verified
Total Interest
Total Interest = (M × n) - Amount Financed
Where: Total Interest = Sum of all interest charges over the loan term (USD), M = Monthly payment (USD), n = Number of payments (months), Amount Financed = Loan principal (USD)
Source: Derived from standard amortization ✓ Verified
Key Insight
On a $27,000 auto loan at 6.9% for 60 months, the monthly payment is $533.36 and total interest is $5,001.60. Extending to 72 months at the same rate would lower the monthly payment to approximately $461 but raise total interest to roughly $6,200 — about $1,200 more over the life of the loan. A $3,000 trade-in on a 60-month loan at 6.9% saves approximately $556 in total interest compared to financing without it.
Frequently Asked Questions
How does a trade-in value reduce my auto loan?
A trade-in value is applied as a direct credit toward the vehicle purchase price, reducing the amount you need to finance. It works identically to a cash down payment in this calculation — every dollar of trade-in value reduces the amount financed by one dollar. For example, a $3,000 trade-in on a $35,000 vehicle (with $5,000 cash down) reduces the financed amount to $27,000. Note that dealers may bundle the trade-in negotiation with the vehicle price negotiation — comparing the trade-in offer to an independent valuation from a third-party source helps ensure both figures are negotiated separately.
What is a typical interest rate on an auto loan?
Auto loan interest rates vary significantly based on credit score, loan term, vehicle age (new vs used), and lender type. As a general reference, borrowers with excellent credit (750+) have historically qualified for rates in the 4-7% range on new vehicles from banks and credit unions, while borrowers with fair credit (580-669) may see rates of 10-16% or higher. Rates on used vehicles are typically 1-3 percentage points above new vehicle rates from the same lender. Dealer-arranged financing can vary widely — comparing a dealer financing offer against a pre-approved offer from a bank or credit union before finalizing the purchase provides a useful reference point.
What is the trade-off between a 60-month and a 72-month auto loan?
A longer term lowers the monthly payment but increases total interest paid because the principal is outstanding for more months. On a $27,000 loan at 6.9%, a 60-month term produces a $533.36 monthly payment and $5,001.60 in total interest. A 72-month term at the same rate produces approximately a $461 monthly payment but roughly $6,200 in total interest — about $1,200 more despite the lower monthly cost. A 60-month term is generally preferred when the monthly payment is affordable, since it builds equity faster and reduces total borrowing cost. A 72-month or 84-month term can make a vehicle affordable on a tight budget but carries a higher risk of being upside-down (owing more than the vehicle is worth) early in the loan.
About This Calculator
Sources:
- Consumer Financial Protection Bureau — Auto Loans — Auto loan terminology, how down payments and trade-ins reduce the amount financed, and consumer protections on vehicle financing
- Consumer Financial Protection Bureau — How does my loan payment get applied? — Standard amortization formula used to compute the monthly payment
Limitations:
- Amount financed does not include sales tax, registration, documentation fees, or dealer add-ons — enter the full financed amount (including any rolled-in fees) in vehicle_price if those costs are being financed
- Assumes a fixed interest rate for the entire loan term — variable-rate auto loans will produce different results over time
- Monthly payment is principal and interest only — does not include gap insurance, extended warranty, or credit insurance premiums that lenders may add to the payment
- Does not model negative equity — if the trade-in has an existing loan balance that is rolled into the new loan, the amount financed will be higher than shown here
When to consult a professional: Before signing a vehicle financing agreement, particularly when a dealer offers to bundle financing, insurance, and add-on products into a single monthly payment
This calculator estimates monthly payments and total interest using the standard fixed-rate amortization formula applied to the amount financed. It does not include sales tax, registration fees, documentation fees, gap insurance, or extended warranty costs, which may increase the actual loan amount. Actual lender terms depend on credit score, lender policies, and market conditions. This tool does not constitute financial advice.