Auto Finance Calculator
See the true monthly cost of a car — not just the loan payment. Includes payment, total interest, full amortization, and the depreciation, fuel, insurance, and maintenance that most buyers forget.
Loan Details
Ownership Costs (annual, optional)
How Auto Finance Really Works
An auto loan is a simple-interest amortizing loan: each monthly payment is split between interest (calculated on the outstanding principal) and principal (which reduces the balance). Early in the loan, most of your payment goes to interest. By the end, almost all of it goes to principal. The total interest over a 5-year loan at 7% APR on $30,000 is roughly $5,580 — making the true cost of the car about 19% higher than the sticker price.
What most buyers miss: the loan payment is only one of five recurring car costs. A typical financed car has monthly expenses that include the loan, depreciation, fuel, insurance, and maintenance/repairs. For a $35,000 car on a 5-year loan, the loan might be $660/month, but the true monthly cost of ownership is closer to $1,200–$1,500. The bigger your down payment and the shorter your loan term, the less interest you pay — and the more equity you keep, which is critical because cars depreciate fast.
To pick the right loan term, use the 20/4/10 rule: at least 20% down, a loan term of 4 years or less, and total monthly vehicle costs under 10% of gross income. A 5-year loan is the longest most financial planners recommend; 6- and 7-year loans keep you upside-down for years, charge thousands in extra interest, and put you at financial risk if the car is totaled. Always get pre-approved from a bank or credit union before visiting the dealer — dealer financing rarely beats a pre-approval and gives you leverage to negotiate.
Frequently Asked Questions
What is the true monthly cost of owning a car?
The true monthly cost of car ownership is more than just the loan payment. A typical financed car costs the owner the loan payment plus depreciation, fuel, insurance, and maintenance. For a $35,000 car on a 5-year loan at 7% APR, expect $700/month for the loan, $400/month in depreciation, $150/month in fuel, $120/month in insurance, and $80/month in maintenance — roughly $1,450/month in total. Most buyers underestimate this by 50% or more.
How does auto loan interest work?
Auto loan interest is calculated on the outstanding principal balance. With a simple interest loan, each payment first pays the interest accrued that month, then reduces the principal. Early in the loan, most of your payment goes to interest. By the end, most goes to principal. The APR (annual percentage rate) includes the interest rate plus any loan fees. A 60-month loan at 7% APR on $30,000 means $5,580 in total interest over the life of the loan.
What is a good interest rate for a car loan in 2026?
As of 2026, a good interest rate for a new-car loan is 5.5% to 6.5% APR with prime credit, 7% to 9% for near-prime, and 10%+ for subprime. Used-car loans run 1 to 2 points higher. Rates depend heavily on credit score, loan term, lender (banks, credit unions, dealer financing, online lenders), and whether the loan is for a new or used vehicle. Credit-union financing is often 1-2% cheaper than dealer financing for buyers with good credit.
Should I finance or pay cash for a car?
Finance if you can earn more than the loan's interest rate in a low-risk investment (currently hard since high-yield savings are 4-4.5% and most auto loans are 6-9%). Pay cash if you don't have a strong investment alternative, want to avoid full coverage insurance requirements (lenders require it; cash buyers can drop to liability), or value the simplicity. A common rule: don't finance if the loan pushes your monthly budget past 15% of take-home pay. A typical 5-year auto loan doubles the vehicle's real cost once interest is included.
What credit score do I need for the best auto loan rate?
For the best auto loan rates in 2026, you generally need a 740+ FICO score (or 7xx+ Equifax in Canada). At 740+ you qualify for prime rates around 5.5-6.5%. A 670-739 score gets near-prime rates of 7-9%. Below 670, rates jump to 10-18% depending on the lender. Some credit unions offer member-rate discounts that can save 1-2% regardless of score. Always get pre-approved from a bank or credit union before visiting the dealer — dealer financing rarely beats a pre-approval and gives you negotiating leverage.
How long should I finance a car?
The shortest term you can comfortably afford. 60 months (5 years) is generally the longest safe term for a new car. 72 and 84-month loans are now common but they keep you underwater (owing more than the car is worth) for years, cost thousands in extra interest, and put you at risk if the car is totaled. A rule of thumb: total monthly car costs (loan + insurance + fuel + maintenance) should not exceed 15-20% of take-home pay. If a shorter loan violates that, the car is too expensive — not the loan term.
What is gap insurance and do I need it?
Gap insurance covers the difference between what you owe on the loan and what the car is worth if it's totaled or stolen. It's most useful in the first 2-3 years of a loan when you are 'upside down' (owe more than the car is worth). A new car loses 20-30% of its value in the first year, so without gap insurance, a total loss can leave you paying off a loan for a car you no longer have. Most lease contracts require it. If you buy or finance, check if your car insurance or credit union offers it cheaply ($20-40/year) before paying the dealer's markup ($500-1000).