Picking out a new car can be fun. Choosing the best auto loan—not so much. Your monthly payment is determined by many factors, including the loan amount, term and the loan’s interest rate, and understanding how they all fit together can be tricky.
To ease this process, Experian’s Auto Loan Calculator can help you figure out how much you can afford and what your payment might be when various factors are adjusted. You can use this information when selecting a loan offer and can also utilize this calculator to gain an edge before you begin shopping.
When using this calculator, provide as much information as possible—that way your results will be more accurate and provide a better starting point you can use to negotiate the best deal.
†The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.
How to Use the Car Payment Calculator
The main purpose of this calculator is to help you compare estimated payments for loans with different term lengths and interest rates. When you apply for a loan, you’ll get to choose a term length, which is the number of months you’ll make payments. Your interest rate may change based on which term length you choose, and your rate will also change based on your credit score.
As you use this tool, you’ll find that the interest rate and loan amounts have already been filled in. These pre-filled values are national averages, so if you aren't sure what to enter, you can leave these values in place. However, providing specific information will give you a more accurate result for your situation.
Once you enter all the information below, click “Calculate” and you’ll be shown a breakdown of your monthly payment, along with information about how much you’ll pay in interest and sales tax. If you click “Add another option to compare payment,” you can enter a different term and rate to see how the payment changes. Comparing these payment estimates could help you choose the term and interest rate that fits better within your budget.
Here is an overview of each field:
- Loan Amount: This is the total amount of money you plan to borrow. You can calculate this by taking the total vehicle price (including taxes, fees and other add-ons) and subtracting your down payment and any additional deductions like a vehicle trade-in.
- Interest Rate: When you apply for a loan, you’ll be assigned an interest rate that can vary depending on how the lender rates your creditworthiness. Your interest rate will be a percentage ranging from 0% to 15% or more.
- Term (in years): When you choose the term of your loan, it will likely be in an interval of 12 months. The average term is around 72 months, but common auto loan terms range from 48 months up to 84 months. Whatever your loan term, take this figure and divide it by 12 to figure out your term in years.
How to Decide on a Loan Term for Your Car
The term of your auto loan is the length of time you’re given to pay back the loan in full. You select the term when you lock in your loan, and the duration you choose will affect your monthly payment amount.
Generally, loans with longer terms have lower monthly payments. As the term of your loan shortens, your monthly payment will go up. Remember, your loan amount remains the same regardless of the term, so even though loans with longer terms have cheaper monthly payments, you’ll likely pay more interest over time.
Since the term you choose can impact your monthly payment, it's important to know what you can afford before locking in a term. To do this, add all your monthly financial obligations and subtract this total from your net income. Take a portion of the leftover money—how much will depend on your lifestyle and income—and set it aside for your monthly transportation costs, part of which will be your monthly car loan payment.
Though it may seem attractive to opt for a longer term for your auto loan, remember that the longer your loan term is, the more you will pay in interest over time. That means that even though you may pay more per month for a 48-month loan, that loan will likely cost you less than a 72-month loan by the time you’re done paying it off.
How to Get a Lower Car Payment
If it looks like you won’t be able to afford the monthly payment for your dream car, don’t worry. You can lower your car payment by making a few changes. Check out the following list for tips on how to lower your car payment:
- Pick a cheaper car. One easy way to lower your payment is by reducing the cost of the car, which will lower your loan amount. The lower your loan amount, the less you’ll have to pay each month—and the less you’ll pay overall in interest.
- Save for a larger down payment. Your down payment is the money you pay upfront when you purchase the car. If you aren't in a rush to get a new car, saving for a bigger down payment will reduce your loan amount and could help you lower your monthly payment. Furthermore, reducing the size of your loan with a big down payment may help you lock in other favorable loan terms.
- Shop around for a lower interest rate. When you take out an auto loan, you’ll be assigned an interest rate that represents the cost to borrow money to pay for your car. Interest is paid as part of your monthly payment, and the lender determines your rate based on your creditworthiness and other factors. If you can lock in a lower interest rate, your monthly payment should be lower as a result. Rates vary by lender, and an improved credit score could help you land a lower one.
Ultimately, when you go to the negotiation table to buy a car and apply for a new loan, it’s always helpful to have good credit. A high credit score can help you lock in a low interest rate and can get you more favorable terms on your loan.