Auto Loan Comparison Calculator: Compare Payments

This auto loan comparison calculator estimates the monthly payment and total interest for one fixed-rate car loan from its amount, APR, and term. Enter the figures from a lender’s offer to see the estimated cost over the scheduled repayment period; compare separate offers by calculating each one with its own inputs.

Formula

The calculator uses the standard fixed-payment amortization formula. It converts the annual percentage rate (APR) to a monthly rate and the loan term to a number of monthly payments:

• Monthly payment: M = P × r / [1 − (1 + r)⁻ⁿ]
• Total interest: I = M × n − P

P is the amount borrowed in dollars, r is the monthly rate expressed as a decimal (APR ÷ 1200), n is the number of monthly payments (years × 12), M is the monthly payment in dollars, and I is estimated total interest in dollars. The displayed payment is rounded to the nearest cent; total interest uses that rounded payment multiplied by the scheduled number of payments, then subtracts the original principal.

Worked Example

Using the calculator’s default values—$20,000 borrowed, 8% APR, and five years:

1. Convert the APR to a monthly decimal rate: 8 ÷ 1200 = 0.0066667.
2. Convert the term to monthly payments: 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The estimated monthly payment is $405.53.
5. Calculate interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

How to Compare Auto Loans

For a meaningful comparison, use the same amount financed for each offer and enter each offer’s APR and repayment term separately. The amount financed may differ from the vehicle’s advertised price: a down payment, trade-in credit, taxes, add-ons, or other amounts included in the contract can change the balance used to calculate payments. Get the actual amount, APR, and term from the lender’s written offer or disclosure rather than relying on an estimate.

• Compare monthly payments: This shows the scheduled cash payment under the calculator’s assumptions, but does not by itself show the full cost of owning the vehicle.
• Compare total interest: This estimates the borrowing cost over the full term, excluding fees and other charges not represented in the inputs.
• Check the term: A longer term spreads repayment across more months and can reduce the calculated payment while increasing total interest, if the other inputs stay the same.
• Check what the APR includes: Ask how the lender calculated the disclosed APR and whether any charges or optional products are treated separately.

For example, a shorter-term offer can have a higher monthly payment but fewer scheduled payments. A longer-term offer can show a smaller monthly payment yet produce a larger total interest figure. The calculator makes that arithmetic visible; it does not account for a borrower’s budget, vehicle depreciation, maintenance, fuel, insurance, or the terms of a particular contract.

What the Results Mean—and Leave Out

The monthly payment is the modelled amount needed to repay principal and interest in equal monthly installments, assuming the rate stays fixed and payments arrive on schedule. The total-interest output is an estimate over the full stated term. It is not the same as the total amount paid: under this model, total scheduled payments equal the principal plus the estimated interest.

Actual contracts can include fees, optional products, payment-date conventions, or other amounts that change the amount financed or payment schedule. Taxes, title and registration costs, insurance, maintenance, and other vehicle expenses are not included. A lender’s disclosure and final contract provide the figures and terms applicable to its offer.

Common Comparison Mistakes

• Comparing different loan amounts: A smaller payment may simply reflect a larger down payment or a smaller amount financed, not a different rate.
• Looking only at the payment: Consider the term and estimated interest alongside the monthly figure.
• Entering a percentage incorrectly: Enter 8 for an APR of 8%, not 0.08. The calculator converts the annual percentage to a monthly decimal internally.
• Rounding too early: Use the displayed payment for the total-interest estimate. Lenders may calculate payment schedules using greater precision or different conventions, so small differences can occur.
• Assuming a quote is final: A preliminary estimate may not match the final contract. Use the confirmed amount financed, APR, and term when available.

Limits and Alternatives

This tool compares the arithmetic of one fixed-rate, fully amortizing loan at a time. To compare two offers, run it twice with the respective figures and place the results side by side. It does not rank offers or account for lender-specific charges, variable rates, skipped or irregular payments, extra payments, or early payoff. If a contract allows additional payments, the actual interest may differ from the scheduled full-term estimate.

A separate budget calculation can help organize recurring expenses, while a vehicle-cost estimate can include ownership costs that this loan formula omits. Those are different questions from comparing the payment and interest produced by the loan inputs.

Assumptions

• The interest rate is fixed for the entire term.
• Payments are equal, monthly, and made at the end of each payment period.
• Interest is modelled monthly using APR ÷ 12.
• Fees, taxes, insurance, optional products, and other charges are not included unless reflected in the amount entered as the loan principal.

Frequently Asked Questions

How do I compare two auto loan offers?
Run the calculator separately for each offer using its amount financed, APR, and term. Compare the resulting monthly payments and estimated total interest, and check each lender’s disclosure for charges or terms the calculator does not include.

Does a lower monthly payment mean a cheaper auto loan?
Not necessarily. The term may be longer, so the scheduled payments can add up to more interest. Compare both payment and estimated total interest, using the same loan amount where possible.

Should I enter the car’s price or the amount financed?
Enter the amount financed shown in the offer or contract. It can differ from the vehicle price after a down payment, trade-in, or other amounts are included.

Why might my lender’s payment differ from this estimate?
The lender may use different rounding or payment-date conventions, or the contract may include fees, optional products, or a different financed amount. Check the final payment schedule and disclosure for exact figures.

Does this calculator include a down payment or trade-in?
No. Enter the resulting amount financed after those items are applied. The calculator does not determine vehicle price, trade-in value, or other contract amounts.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Settled Without Accrued Interest? Calculate the Balance
• Relieved Accrued Interest Paid at Purchase?
• Secondary Accrued Interest: Meaning and Calculation

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2