How is the monthly auto loan payment calculated?

The monthly payment is calculated using the standard amortization formula for an installment loan: P = [rPv] / [1 - (1 + r)^(-n)], where P is the monthly payment, r is the monthly interest rate (annual rate ÷ 12), Pv is the present value (loan amount minus down payment), and n is the total number of payments (loan term in years × 12).

How does a larger down payment affect my loan?

A larger down payment reduces the amount you need to borrow, which results in: 1) A lower monthly payment, 2) Less total interest paid over the life of the loan, and 3) Possibly a better interest rate, as lenders see less risk. Putting down at least 20% is often recommended to avoid being upside down on your loan (owing more than the car is worth).

Should I choose a shorter or longer loan term?

Shorter term (e.g., 3 years): Higher monthly payments but significantly less interest paid overall. You build equity faster and own the car sooner. Longer term (e.g., 6-7 years): Lower monthly payments but much more interest paid over time. You risk being upside down on the loan for a longer period if the car depreciates faster than you pay down the loan.

🚗 Auto Loan Calculator

Calculate your monthly car payment with a full amortization schedule and see the total cost of your loan.

Loan Amount: Currency Note: Calculations are performed in your selected currency. Annual Interest Rate (%): Loan Term (Years): Most auto loans are between 3-7 years. Longer terms mean lower payments but more interest paid. Down Payment:

Enter values and click Calculate.

Payment #	Payment	Principal	Interest	Remaining Balance

📘 How This Calculator Works

This auto loan calculator helps you determine your monthly payment and the total cost of your car loan using the standard amortization formula. It takes into account your loan amount, interest rate, loan term, and down payment to provide a detailed breakdown of your payment schedule.

The formula used is: Monthly Payment = P × [r(1 + r)^n] / [(1 + r)^n - 1]

P = Principal loan amount (after down payment)
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (loan term in years × 12)

The calculator also generates a complete amortization schedule showing how each payment is split between principal and interest, and how your loan balance decreases over time.

❔ Frequently Asked Questions

How is the monthly auto loan payment calculated?: The monthly payment is calculated using the standard amortization formula for an installment loan: P = [rPv] / [1 - (1 + r)^(-n)], where P is the monthly payment, r is the monthly interest rate (annual rate ÷ 12), Pv is the present value (loan amount minus down payment), and n is the total number of payments (loan term in years × 12).
What is an amortization schedule?: An amortization schedule is a table that shows the breakdown of each payment throughout the life of the loan. For each payment, it shows how much goes toward interest (based on the current balance) and how much goes toward reducing the principal (the actual loan amount). Early in the loan, most of your payment goes toward interest; later, more goes toward principal.
How does a larger down payment affect my loan?: A larger down payment reduces the amount you need to borrow, which results in: 1) A lower monthly payment, 2) Less total interest paid over the life of the loan, and 3) Possibly a better interest rate, as lenders see less risk. Putting down at least 20% is often recommended to avoid being "upside down" on your loan (owing more than the car is worth).
Should I choose a shorter or longer loan term?: Shorter term (e.g., 3 years): Higher monthly payments but significantly less interest paid overall. You build equity faster and own the car sooner.
Longer term (e.g., 6-7 years): Lower monthly payments but much more interest paid over time. You risk being upside down on the loan for a longer period if the car depreciates faster than you pay down the loan.
What's the difference between interest rate and APR?: The interest rate is the cost of borrowing the principal loan amount. The APR (Annual Percentage Rate) includes the interest rate plus certain fees associated with the loan. For auto loans, the difference is usually small, but the APR gives you a more complete picture of the loan's cost. Always compare APRs when shopping for loans.
Does this calculator include taxes, fees, or insurance?: No, this calculator shows only the principal and interest payments on the loan amount. The total cost of car ownership also includes: sales tax, registration fees, documentation fees, and ongoing costs like insurance, fuel, maintenance, and repairs. These can add significantly to your monthly budget.
Can I pay off my auto loan early?: Most auto loans allow early payoff, but it's crucial to check your loan agreement for a "prepayment penalty." Even without a penalty, make sure your extra payments are applied to the principal balance, not just future payments. This will reduce the total interest you pay and shorten the loan term.