Car Loan Calculator: Payments and Interest Explained

A car loan calculator estimates your monthly payment and total interest from the amount borrowed, annual percentage rate (APR), and loan term. Enter those figures to see the scheduled payment and the interest paid over the full term, assuming fixed-rate monthly payments.

Formula

The calculator uses the standard level-payment loan formula. It converts the annual APR to a monthly rate, calculates a payment that pays down both interest and principal over the selected number of months, rounds that payment to cents, and calculates total interest from the rounded payment.

Monthly payment: M = P × r ÷ [1 − (1 + r)⁻ⁿ]

Total interest: I = M × n − P

• P is the loan principal, in dollars ($).
• APR is the annual percentage rate, entered as a percentage.
• r is the monthly rate as a decimal: APR ÷ 1,200.
• n is the number of monthly payments: loan term in years × 12.
• M is the monthly payment, in dollars, rounded to the nearest cent.
• I is total interest over the scheduled term, in dollars.

The displayed interest is calculated as the sum of the rounded monthly payments minus the amount borrowed. Actual lender calculations can differ slightly because of payment dates, rounding, fees, or contract terms.

Worked Example

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

1. Convert APR to a monthly decimal rate: r = 8 ÷ 1,200 = 0.0066667.
2. Find the number of payments: n = 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The unrounded payment is about $405.53; rounded to cents, the monthly payment is $405.53.
5. Total scheduled payments are $405.53 × 60 = $24,331.80.
6. Total interest is $24,331.80 − $20,000 = $4,331.80.

Assumptions

• The interest rate is fixed for the full term.
• Payments are made monthly, with the standard level-payment calculation assuming payments occur at regular intervals.
• Interest compounds monthly using APR ÷ 12.
• The calculation does not include taxes, registration charges, insurance, lender fees, optional products, or other amounts that may be included in a vehicle purchase or loan.

How to Use the Estimate

Enter the amount you expect to finance, not automatically the vehicle’s advertised price. The amount financed may reflect a down payment, trade-in value, or other amounts added to the loan. Ask the lender for the actual amount financed and APR to use; this calculator does not determine either figure.

The monthly payment is the scheduled principal-and-interest amount under the assumptions above. Total interest estimates the cost of borrowing across all scheduled payments. It is not the total cost of owning a car: fuel, maintenance, insurance, taxes, and other ownership costs are outside this calculation.

Use the results to understand how changing one input affects the arithmetic. Holding the amount and APR constant, a longer term spreads repayment over more months and generally lowers the required monthly payment, while increasing the total interest in this fixed-rate model. A larger principal or higher APR generally increases both the payment and total interest. These are formula effects, not a judgment about whether a loan is suitable.

What Changes the Payment and Interest?

• Amount financed: A larger principal means more money is being repaid and, at the same rate and term, raises the payment and interest.
• APR: The APR is an annualized rate used here as a monthly rate by dividing by 12. Use the rate supplied for the loan being estimated; do not treat a sample input as a market quote.
• Term: The number of monthly payments determines how quickly principal is repaid. Changing the term changes both payment size and the time interest accrues.
• Payment rounding and timing: This estimate rounds the regular payment to cents. A lender may use specific due dates, daily accrual, or a different rounding method, which can produce a slightly different payoff total.

Common Misunderstandings and Limits

APR and the monthly rate are not interchangeable. If the APR is 8%, the formula uses 8 ÷ 1,200, or about 0.006667 per month—not 8 as a decimal monthly rate and not 8% charged anew each month. The APR input is a percentage, so enter 8 for 8%, rather than 0.08.

Another common misconception is that total interest equals the APR multiplied by the original balance and the number of years. That ignores the declining balance: each scheduled payment reduces principal, so the interest portion changes over time. The amortization formula accounts for that pattern.

The calculator assumes the full loan follows one fixed rate and that payments are made as scheduled. It does not model a down payment separately, a balloon payment, late or missed payments, extra principal payments, refinancing, a changing rate, or a payoff quote on a particular date. Extra payments can alter the payoff schedule and interest, but this calculator does not estimate those effects. For a contract-specific schedule or payoff amount, use the lender’s figures.

Frequently Asked Questions

How do I calculate a car loan payment?
Convert APR to a monthly decimal rate by dividing by 1,200, then use the level-payment formula with the amount financed and the number of monthly payments. This calculator performs those steps and rounds the payment to cents.

Does a longer car loan term reduce total interest?
Not in the standard fixed-rate calculation when the principal and APR stay the same. A longer term usually lowers the monthly payment by spreading repayment out, but interest accrues for more months and total interest generally rises.

Is the calculator’s total interest the same as the total cost of the car?
No. It is estimated interest on the modeled loan only. It does not include the vehicle’s cash price, taxes, insurance, maintenance, fees, or other costs unless those amounts are included in the amount financed—and even then, it does not separately identify them.

Why is my lender’s payment different?
The quoted loan may use a different amount financed, APR, term, payment date, or fee treatment. The lender may also calculate interest or round amounts differently. Compare the inputs and the lender’s written payment schedule.

Can I use the calculator for a used car?
Yes. The payment formula does not depend on whether the vehicle is new or used. Enter the relevant amount financed, APR, and term; the calculator does not assess vehicle value or loan eligibility.

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

Related

• Auto Loan Calculator With Trade-In and Amount Owed (Negative Equity)
• Car Loan Calculator With Down Payment: Monthly Car Payment

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