Dealerships sell cars by the monthly payment — “only $567 a month” — because a payment hides the total price of borrowing. This calculator reverses that trick: enter the loan details and it shows the monthly payment, the total interest, and the full amount you will hand over before the car is truly yours.
Car Loan Calculator
Find your monthly payment, total interest and the full cost of financing a car.
How it works: the amount you finance (price minus down payment) is repaid in equal monthly instalments at the APR you enter, using the standard amortisation formula. A bigger down payment, a lower APR or a shorter term all reduce the total interest — though a shorter term means a higher monthly payment. Taxes, fees, insurance and running costs are not included.
How it works
Enter the amount you need to borrow (the car’s price minus your deposit and any part-exchange value), the APR, and the loan term in months or years. UK buyers usually borrow over 3–5 years; US buyers are increasingly offered 72- and even 84-month terms, which this calculator will quickly show you the cost of.
The results show your monthly payment, total interest, and total cost of the loan. You can also try the reverse comparison most dealers hope you skip: keep the amount fixed and shorten the term to see how much interest disappears.
How the calculation works
Car loans are amortizing loans, using the same formula as a mortgage:
Monthly payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the amount borrowed, r is the monthly rate (APR divided by 12, expressed as a decimal), and n is the number of monthly payments.
APR is the key input because it is meant to capture the true cost of credit. In the UK, APR must include mandatory fees, and lenders must show a representative APR that at least 51% of accepted applicants receive. In the US, APR on an auto loan includes the interest rate plus most lender fees, but dealer add-ons, extended warranties and GAP insurance rolled into the loan raise what you repay without always being obvious in the headline rate. Interest is front-loaded: in the first year of a five-year loan, a disproportionate share of each payment is interest, which is why settling or part-exchanging early can leave a settlement figure higher than expected.
Worked example: $28,000 borrowed at 7.9% APR over 60 months
Step 1 — Monthly rate. r = 7.9% ÷ 12 = 0.6583% per month. n = 60 payments.
Step 2 — Apply the formula. (1.006583)⁶⁰ ≈ 1.4825. Payment = $28,000 × 0.006583 × 1.4825 ÷ 0.4825 ≈ $567 per month.
Step 3 — Total cost. $567 × 60 = $34,020 repaid, so interest totals about $6,020 on top of the $28,000 borrowed.
Step 4 — Compare a shorter term. Over 48 months the same loan costs about $682 a month, but total interest falls to roughly $4,740 — saving around $1,280 and leaving you loan-free a year earlier. Over 72 months the payment drops to about $490, yet interest climbs to roughly $7,280. The “cheaper” monthly payment is the most expensive loan.
Things to watch
- Longer terms risk negative equity. Cars depreciate fastest in the first two years. On a 72- or 84-month loan you can owe more than the car is worth for much of the term, which traps you if the car is written off or you need to sell — GAP insurance exists precisely because of this gap.
- Your credit score sets the APR, not the sticker. In the US, borrowers with excellent credit might pay 5–7% on a new car while subprime borrowers face 15–20%+. In the UK, the advertised representative APR is only guaranteed to 51% of successful applicants. Run the calculator at a realistic rate for your profile, not the headline.
- Dealer finance vs bank loan vs credit union. Dealer-arranged finance is convenient and sometimes subsidised to 0% on new cars, but a direct bank or credit union loan can beat standard dealer APRs and makes you a cash buyer when negotiating the car’s price.
- Fees and add-ons inflate the amount borrowed. Documentation fees, paint protection, service plans and extended warranties added to the finance all attract interest for the full term. A $1,200 add-on on a 60-month loan at 7.9% actually costs about $1,460.
- Check early settlement terms. UK loans regulated by the Consumer Credit Act have a statutory right to settle early with a rebate of future interest. US loans may have prepayment penalties on some subprime products — check before signing if you plan to overpay.
Frequently asked questions
How much car can I afford?
A common guideline is that total car costs — payment, insurance, fuel and maintenance — should stay under 15–20% of your take-home pay, and the loan itself ideally under 10%. Use your net pay, not your salary, and include insurance, which for younger drivers can rival the payment.
Does a bigger deposit really help?
Yes, twice over: you borrow less, and a lower loan-to-value can qualify you for a better APR tier. It also protects you against negative equity in the car’s steep early depreciation period.
Is 0% APR always the best deal?
Not always. Manufacturers sometimes offer a cash discount or 0% finance, not both. If the cash discount is large, a low-rate bank loan can work out cheaper overall. Compare the total cost in this calculator both ways, using the discounted price with the bank loan.
What is the difference between interest rate and APR?
The interest rate is charged on the balance. APR expresses the total cost of credit over a year, including compulsory fees, so it is the better figure for comparing two offers with different fee structures.
Can I pay off a car loan early?
Usually yes. In the UK you have a legal right to settle early and receive a rebate of unearned interest, though an early settlement charge of up to roughly one month’s interest may apply on some agreements. In the US, check your contract for prepayment penalties, which are uncommon on prime loans but appear on some subprime ones.
This calculator is for guidance only and isn’t financial advice.