Car Payment Calculator

Car payments are calculated using the loan amount (vehicle price minus down payment and trade-in), interest rate, and loan term. The standard amortization formula is used: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments.

Shorter loan terms (36-48 months) have higher monthly payments but lower total interest. Longer terms (60-84 months) lower your monthly payment but increase total cost significantly. Financial experts generally recommend keeping auto loans to 60 months or less to avoid owing more than the car is worth.

Yes. A trade-in reduces the amount you need to finance, which lowers both your monthly payment and total interest paid. The trade-in value is subtracted from the vehicle price before the loan is calculated, similar to a down payment.

Interest rates depend on your credit score, loan term, and whether the car is new or used. For new cars, excellent credit may get rates around 4-6%, while used cars are typically 1-2% higher. Rates above 10% are considered high and significantly increase total cost.

A down payment of 10-20% is recommended. It reduces your loan amount, lowers monthly payments, decreases total interest, and helps prevent being upside down on the loan (owing more than the car is worth). Some lenders require a minimum down payment.