Buying a car is one of the most significant financial decisions you'll make. This car loan calculator helps you break down the numbers to see how much you will actually pay each month and over the life of the loan. To calculate your payment, we use the standard amortization formula:
P (Principal): The total amount you are borrowing (Price – Down Payment – Trade-in).
r (Monthly Interest Rate): Your annual interest rate divided by 12 months.
n (Number of Payments): The total number of months in your loan term.
Key Factors Affecting Your Car Loan
Several variables can drastically change your monthly commitment and the total cost of ownership:
1. The Interest Rate (APR)
Your credit score is the primary driver of your interest rate. A difference of just 2% in your APR can save or cost you thousands of dollars over a 60-month loan.
2. Loan Term Length
While 72-month and 84-month loans offer lower monthly payments, they result in much higher total interest costs. Longer terms also increase the risk of being "underwater" (owing more than the car is worth).
3. Down Payment
Putting at least 20% down is a common rule of thumb. It reduces your monthly payment immediately and helps protect you against the rapid depreciation of new vehicles.
Real-World Example
Imagine you are purchasing a vehicle for $30,000. You have a $5,000 down payment and a trade-in worth $2,000. You secure a 5% interest rate for 60 months.
Total Loan Principal: $23,000
Monthly Payment: $434.04
Total Interest Paid: $3,042.40
Total Cost of Car: $33,042.40 (including interest, down payment, and trade)
function calculateAutoLoan() {
var carPrice = parseFloat(document.getElementById("carPrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value) || 0;
var tradeIn = parseFloat(document.getElementById("tradeIn").value) || 0;
var annualRate = parseFloat(document.getElementById("interestRate").value);
var months = parseInt(document.getElementById("loanTerm").value);
if (isNaN(carPrice) || carPrice <= 0) {
alert("Please enter a valid vehicle price.");
return;
}
var principal = carPrice – downPayment – tradeIn;
if (principal <= 0) {
document.getElementById("monthlyResult").innerHTML = "$0.00";
document.getElementById("totalLoanVal").innerHTML = "$0.00";
document.getElementById("totalInterestVal").innerHTML = "$0.00";
document.getElementById("resultsArea").style.display = "block";
return;
}
var monthlyRate = (annualRate / 100) / 12;
var monthlyPayment = 0;
if (monthlyRate === 0) {
monthlyPayment = principal / months;
} else {
var x = Math.pow(1 + monthlyRate, months);
monthlyPayment = (principal * x * monthlyRate) / (x – 1);
}
var totalCost = monthlyPayment * months;
var totalInterest = totalCost – principal;
document.getElementById("monthlyResult").innerHTML = "$" + monthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalLoanVal").innerHTML = "$" + principal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalInterestVal").innerHTML = "$" + totalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resultsArea").style.display = "block";
}