Car Loan Calculator: Monthly Payments and Total Interest

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 a fixed monthly payment and the estimated interest over the full term; the result is an arithmetic estimate, not a lender quote.

Formula

The calculator uses the standard fixed-payment loan formula. It converts the annual APR to a monthly rate, then calculates the payment that repays the principal and interest over the selected number of monthly payments:

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

P is the amount financed in dollars; apr is the annual percentage rate in percent; r is the monthly rate, calculated as apr ÷ 1200; n is the number of monthly payments, calculated as years × 12; M is the monthly payment in dollars; and I is estimated total interest in dollars. The payment is rounded to the nearest cent before total interest is calculated.

Worked Example

Using the calculator’s defaults—$20,000 financed, 8% APR, and a five-year term—the calculation is:

1. Convert the APR to a monthly rate: r = 8 ÷ 1200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60 months.
3. Calculate the monthly payment: M = 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53, rounded to cents.
4. Calculate total interest using that rounded payment: I = $405.53 × 60 − $20,000 = $4,331.80.

The estimated total of the 60 payments is $24,331.80: the $20,000 principal plus $4,331.80 in calculated interest. Actual lender figures can differ because a real contract may use different timing, rounding, or included charges.

Assumptions

• The interest rate remains fixed for the full term.
• Payments are equal, made monthly, and begin on the schedule assumed by the lender.
• Interest accrues monthly using APR divided by 12.
• The calculation excludes fees, taxes, insurance, add-on products, and other charges unless they are included in the amount financed.

What the Payment Estimate Includes

The calculator models the loan balance, not the full cost of owning or operating a car. If a dealer or lender includes eligible charges in the amount financed, add those charges to the principal input to model their effect on the payment. Do not count the same charge twice.

A car’s purchase price is not necessarily the loan amount. A down payment or trade-in value can reduce the amount borrowed; a remaining balance from a trade-in, fees, or other financed items can increase it. For a useful estimate, first determine the amount that would actually appear as principal on the proposed loan documents. The calculator does not determine that figure for you.

Monthly ownership costs may also include insurance, fuel, maintenance, registration, and parking. Those are separate from principal and interest and are not reflected in this result. A payment estimate alone therefore does not describe the complete cost of owning a vehicle.

How to Use and Interpret the Results

Enter the principal amount, APR stated for the loan, and term in years. The APR must be entered as a percentage: enter 8 for 8%, not 0.08. The term must be in years, so a 60-month term is five years. Check the lender’s written figures for the exact amount financed, rate, and number of payments before comparing the estimate with a contract.

The payment is the scheduled amount of principal and interest under the calculator’s assumptions. Total interest is the sum of those rounded monthly payments minus the original principal. It is not the total amount paid: add the principal to the interest to get the modeled payment total. Small differences can arise when a lender rounds each payment or accrues interest using actual payment dates.

The estimate assumes every scheduled payment is made on time and in the same amount. It does not model a late payment, skipped payment, extra principal payment, changing rate, or early payoff. Those events can change the amount and timing of interest. A different payment schedule requires a calculation built for that schedule.

Term, APR, and Common Misunderstandings

For the same principal and APR, extending the term generally lowers the scheduled monthly payment because the balance is spread across more payments. It also generally increases the total interest in this fixed-rate model, because interest accrues over a longer period. Shortening the term has the reverse arithmetic effect: higher scheduled payments and less time for interest to accrue.

APR is an annualized rate expressed as a percentage, while the formula needs a monthly rate. Dividing by 12 converts a percentage rate to a monthly decimal rate, which is why the calculator divides APR by 1200. Entering 8 as 0.08, or treating the monthly rate as an annual rate, produces a materially incorrect result.

A frequent misconception is that the calculator’s monthly payment equals the amount needed to budget for the car. It does not include costs outside the modeled loan. Another is that total interest is the total cost of the loan; the total of payments also includes repayment of principal. Review each amount separately.

Limits and Checking a Quote

This is a standard amortization estimate for a level-payment loan. It is not a quote, approval assessment, or prediction of what a lender will offer. The rate and amount must come from the actual proposed terms; the example inputs are only illustrative. The formula does not account for lender-specific fee treatment, payment-date conventions, or other contractual details.

When checking a written quote, compare like with like: amount financed, APR, term, payment frequency, and any charges included in the financed balance. Ask the lender to explain differences between its disclosed payment and this estimate. The contract and lender disclosure, rather than a general calculator, specify the actual figures.

Frequently Asked Questions

How do I calculate a car loan payment?
Use the fixed-payment formula with the amount financed, monthly rate (APR ÷ 1200), and number of monthly payments. This calculator applies that formula and rounds the payment to cents.

Does the calculator include a down payment?
No. A down payment is not part of the loan principal. To reflect its effect, enter the amount financed after the down payment, based on the proposed loan terms.

Why does a longer car loan have more total interest?
With the same principal and APR, a longer term keeps some balance outstanding for more months. The monthly payment may be lower, but the modeled interest accumulated over the full schedule is generally higher.

Is APR the same as the monthly interest rate?
No. APR is an annual percentage. This formula converts it to a monthly decimal rate by dividing the percentage value by 1200.

Why is my lender’s payment different?
The quoted amount may use a different principal, rate, term, fee treatment, payment date, or rounding convention. Check the written disclosure and ask the lender which assumptions explain the difference.

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

Related

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

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