Car Loan Payment Calculator: Monthly Cost and Interest

Calculate a car loan’s estimated monthly payment by entering the amount financed, annual APR, and loan term. The calculator also estimates total interest using a fixed-rate monthly-payment formula; its result is principal and interest only.

Formula

The monthly payment is the fixed installment that pays down the loan principal and covers interest over the selected number of monthly payments. The formula is:

Payment = round[P × r ÷ (1 − (1 + r)⁻ⁿ), 2]

• P is the amount financed, in dollars.
• r is the monthly interest rate, calculated as APR ÷ 1,200. APR is entered as a percentage per year; for example, 8% becomes 0.0066667 per month.
• n is the number of monthly payments, calculated as loan term in years × 12.
• round(…, 2) rounds the monthly payment to the nearest cent.

Total interest is estimated as monthly payment × n − P. Because the calculator uses the payment rounded to cents, this total is based on that displayed payment and can differ slightly from a calculation using unrounded values.

Worked Example

Using the calculator’s default inputs—$20,000 financed, 8% APR, and 5 years—the calculation is:

1. Convert APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 months.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
4. Estimate total interest using the displayed payment: $405.53 × 60 − $20,000 = $4,331.80.

So, under these assumptions, the estimated payment is $405.53 per month, and estimated interest over 60 payments is $4,331.80. The sum of the displayed payments is $24,331.80, including the original $20,000 principal.

Assumptions

• The rate is fixed for the entire loan term.
• Payments are equal monthly installments, made at the end of each monthly period.
• Interest accrues monthly at APR divided by 12 (APR ÷ 1,200 when APR is entered as a percentage).
• The estimate excludes fees, taxes, insurance, optional products, and other charges unless they are included in the amount financed. It does not model a changing balance from extra or missed payments.

What to Enter and How to Read the Result

Loan amount means the amount borrowed, not necessarily the vehicle’s advertised price. A down payment or trade-in credit may reduce the amount financed; rolled-in fees or other financed costs may increase it. Enter the principal shown in the lender’s loan details if available. Do not subtract a down payment twice if the amount you enter is already the financed balance.

APR is entered as a yearly percentage, such as 8 for 8%, rather than as 0.08 or 8. The calculator converts that input to a monthly rate. Enter the APR applicable to the loan offer, rather than assuming that an advertised figure or an interest rate alone is the same as your contract’s APR. Obtain the actual rate and amount financed from the lender; they are inputs, not predictions from this calculator.

Loan term is entered in years. A term of 5 means 60 monthly payments. The monthly payment is only one part of the cost: extending the term generally means more payment periods, so total interest can rise even when the monthly amount is lower. The exact difference depends on the entered principal and APR.

The payment output represents scheduled principal and interest. The total-interest output estimates the interest paid over the full term if every scheduled payment is made as assumed. Neither output is a complete ownership-cost estimate or a statement about approval or affordability.

Factors That Change a Car Loan Estimate

• Amount financed: Borrowing more raises the payment and, with other inputs unchanged, increases total interest.
• APR: A higher entered APR raises the payment and the interest portion of the repayment schedule.
• Term: More months spread repayment across a longer period. This can reduce the scheduled monthly amount while increasing total interest.
• Down payment or trade-in: These can affect the amount financed, but the calculator does not determine their value or account for a remaining balance on a trade-in.
• Fees and add-ons: If financed, these change the principal; if paid separately, they are not represented in the monthly payment output.

For a real transaction, use the lender’s disclosed amount financed, APR, payment schedule, and any separately billed costs. A calculator cannot determine what a vehicle, trade-in, or optional product will cost.

Common Errors and Formula Limits

A frequent input mistake is entering APR as a decimal: entering 0.08 means 0.08%, not 8%. Another is treating the vehicle price as the loan amount when a down payment, trade-in, or financed charge changes the principal. Check that the term is in years, not months, and that the APR is expressed as a percentage per year.

This standard formula applies to a level-payment, fixed-rate loan with monthly periods. It does not reproduce every contract’s day-by-day interest calculations, payment-date adjustments, irregular first payment, fees, or payoff quote. Rounding each scheduled payment to cents also means the final payment or exact interest shown by a lender may differ slightly. Extra payments can change payoff timing and interest, but this calculator assumes only the regular payment.

Frequently Asked Questions

How do I calculate a car loan payment?
Convert APR to a monthly rate by dividing the percentage by 1,200, convert the term to months, then apply the fixed-payment formula shown above. The result is rounded to cents.

Does the monthly payment include insurance and taxes?
No. This calculation estimates principal and interest only. Insurance, taxes, registration costs, and other charges are not included unless an amount is incorporated into the loan principal.

Why does a longer car loan have more total interest?
A longer term usually means more monthly periods in which interest accrues. It can lower the scheduled payment while increasing the sum of interest across the full repayment period.

Is APR the same as the interest rate?
They are related but are not always interchangeable. APR is a yearly percentage associated with the cost of borrowing under the loan’s terms. Use the APR stated for the specific loan when making this estimate.

Why is my lender’s payment different?
The lender may use different payment dates, rounding, financed fees, or contract-specific calculations. Compare the amount financed, APR, term, and payment schedule in the lender’s disclosure with the calculator inputs.

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

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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 | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2