🚗 Auto Loan Calculator
Calculate your monthly car payment, total interest costs, and vehicle financing breakdown.
What a car really costs to finance
Car finance is sold on the monthly payment, which is exactly the number that hides the price. A dealer who cannot move on the sticker can almost always move the payment, by extending the term, and most buyers accept it because the payment is the figure they are tracking. The result is that average loan terms have drifted from 48 months to 72 and beyond.
The calculator above works from the other direction: enter the price, the deposit, the trade-in and the rate, and it gives you both the payment and what the finance adds to the price of the car.
What the term does
| Term | Monthly payment | Total interest | Total paid for the car |
|---|---|---|---|
| 36 months | $995 | $3,820 | $35,820 |
| 48 months | $774 | $5,152 | $37,152 |
| 60 months | $641 | $6,460 | $38,460 |
| 72 months | $553 | $7,816 | $39,816 |
| 84 months | $489 | $9,276 | $41,276 |
Going from 36 to 84 months cuts the payment by $506 and adds $5,456 to the cost. It also keeps you in the loan for seven years on an asset that will be worth roughly a quarter of its price by then.
Negative equity, the real risk of a long term
A new car typically loses 20% of its value in the first year and around 50% by year five. A long loan pays the balance down more slowly than the car loses value, so for a stretch of the term you owe more than the car is worth. That is negative equity, and it matters the moment you want to sell, trade in, or deal with an insurance write-off after an accident.
| End of year | Loan balance | Car value | Equity |
|---|---|---|---|
| 1 | $24,898 | $26,240 | +$1,342 |
| 2 | $20,799 | $21,517 | +$718 |
| 3 | $16,382 | $17,644 | +$1,262 |
| 4 | $11,622 | $14,468 | +$2,846 |
With a 10% deposit this loan stays just the right side of positive. With no deposit at all, the same buyer is underwater for most of the first three years. The deposit is not about reducing the payment; it is about staying solvent on the asset.
Dealer finance versus a bank or credit union
Dealers earn on the finance as well as the car, often through a markup on the rate the lender actually offered. Arranging a loan independently before you shop does two things: it gives you a rate to beat, and it turns you into a cash buyer in the negotiation, which separates the price discussion from the finance discussion. If the dealer beats your pre-approval, take it; that is the point of having one.
A 0% manufacturer offer is usually an alternative to a cash rebate, not a free addition to it. Compare the rebate taken as a discount plus your own finance against 0% at full price. On a $32,000 car, a $2,500 rebate with a 6% loan often beats 0% at list.
What else belongs in the budget
- Sales tax and registration, often 6% to 10% of the price, sometimes financeable and sometimes not.
- Insurance, which varies far more by model than people expect; get a quote before you commit.
- Gap insurance, which covers the difference between the loan balance and the insurer's payout if the car is written off. Worth it precisely in the negative equity window above.
- Maintenance and tyres, typically $800 to $1,500 a year once a car is out of warranty.
A worked example
A $29,500 car, $3,000 deposit, $4,200 trade-in with $1,800 still owing on it. The amount financed is $29,500 − $3,000 − $4,200 + $1,800 = $24,100. At 6.9% over 60 months the payment is $476.49 and the interest is $4,489. Rolling the old loan's $1,800 into the new one added $337 of that interest, which is the price of not clearing the previous debt first.
Frequently Asked Questions (FAQs)
How long should a car loan be?
Four years or less for a new car, three or less for a used one. The usual test: if you cannot afford the payment over 48 months, the car is more than your budget supports. Longer terms do not make a car affordable, they make it slower to stop paying for.
How much deposit should I put down?
Twenty per cent on a new car and ten on a used one are the conventional targets, and they exist to keep you out of negative equity rather than to reduce the payment. If the deposit would empty your emergency fund, a cheaper car is the better answer.
Should I roll negative equity into a new loan?
Only if there is no alternative. You are borrowing money against a car you no longer own, at interest, on top of the new car's own depreciation. It is the fastest route to being permanently underwater. Keeping the old car until the balance clears is almost always cheaper.
Is 0% finance really free?
The finance is, but usually only if you give up a cash rebate to get it. Work out the rebate as a discount, finance the lower price at a normal rate, and compare the two totals. Also check that the 0% offer does not require a short term you cannot afford.
Does my credit score affect the car loan rate?
Heavily. The spread between excellent and poor credit on auto loans is routinely ten to fifteen percentage points, which on a $30,000 five-year loan is more than $11,000. Checking and fixing errors on your credit file before applying is the highest-return hour of work in the whole process.
Should I finance a used car over a new one?
Used cars carry higher rates, typically one to three points more, because they depreciate unpredictably and are worth less as security. Even so, buying a two or three year old car avoids the steepest part of the depreciation curve, which usually outweighs the higher rate.
Can I pay off a car loan early?
Most allow it. Check whether the loan uses simple interest, where early payoff always saves money, or a precomputed interest method, where the interest was fixed at the start and early repayment saves little. Precomputed loans are more common at subprime lenders.