Introduction
This car amortization calculator shows you what a car loan really costs. Type in the car price, your down payment, your trade-in value, the sales tax, the interest rate (APR), and how many months you want to pay. The calculator does the rest.
You get your monthly car payment, the total interest you will pay, your payoff date, and the true total cost of the car. You also get a full amortization schedule. That is a month-by-month list that shows how much of each payment goes to the loan (principal) and how much goes to interest. Early on, more of your money goes to interest. Later, more of it pays down the car.
Two charts help you see it fast. One shows your balance dropping to zero. The other shows the split between principal and interest each month. You can also download the schedule as a CSV or Excel file to save or print.
Try changing the term or the down payment. A longer loan means a smaller monthly payment, but you pay more interest in the end. A bigger down payment or trade-in lowers both. Use this tool before you sign at the dealership so you know the numbers first.
How to use our Car Amortization Calculator
Enter your car price, cash down, trade-in, tax rate, interest rate, loan length, and start date. The calculator shows your monthly car payment, total interest, total amount paid, payoff date, the true cost of the car, and a full month-by-month amortization schedule you can download.
Vehicle Price: Type the price you agreed to pay for the car, before tax and before any money down.
Down Payment: Type the cash you will pay up front at signing. It must be less than the car price. Put 0 if you pay nothing down.
Trade-In Value: Type what the dealer will give you for your old car. Put 0 if you are not trading one in.
Sales Tax: Type your state and local tax rate as a percent, like 6.25. The tax is added to the price and rolled into the loan.
Interest Rate (APR): Type the yearly rate your lender gave you, like 6.5. If you don't know it yet, use a rate from a loan offer or a rate quote.
Loan Term: Pick how many months you will pay, from 12 to 84. A longer term lowers the monthly payment but costs more interest.
First Payment Date: Pick the month your first payment is due. This sets the dates in your schedule and your payoff month.
The results update as you type. Click Calculate to refresh them, or Reset to start over with the default numbers.
What Is Car Loan Amortization?
Amortization is the way a car loan gets paid off, one month at a time. Each payment you make is split into two parts: interest (the fee the lender charges) and principal (the money that lowers what you owe).2 Your payment stays the same every month, but the split changes. Early on, most of the money goes to interest.1 Later, most of it goes to principal. When the last payment is made, the loan hits zero and the car is fully yours.
What Goes Into a Car Loan
- Vehicle price: the price you agree to pay for the car.
- Sales tax: a percent added by your state or city. Taxes can be added to the amount you borrow.4
- Down payment: cash you pay up front. More cash down means a smaller loan.
- Trade-in value: what the dealer gives you for your old car. It cuts the loan just like cash.
- APR: your yearly interest rate. A lower APR saves you real money.
- Loan term: how many months you pay. A typical auto loan term ranges from 3 to 7 years.7
The money you actually borrow is called the amount financed.3 It equals the price plus tax, minus your down payment and trade-in. Dealer fees and title costs can be added too.4
How Your Monthly Payment Is Found
Lenders use one standard formula:
M = P × r(1 + r)n ÷ [(1 + r)n − 1]
Here, M is the monthly payment, P is the amount financed, r is the APR divided by 12, and n is the number of months. Each month, the lender charges interest on the balance you still owe.1 Whatever is left of your payment knocks down the balance.
Why Loan Term Matters So Much
A longer term makes the monthly payment smaller, which feels good. But you pay interest for more years, so the car costs more in the end. Cars quickly lose value once you drive off the lot, so a longer loan, like 72 or 84 months, can leave you upside down, owing more than the car is worth.5 A shorter term costs more each month but saves a lot of interest.
Ways to Pay Less Interest
- Put more money down, or use a trade-in.
- Shop your rate with a bank or credit union before you go to the dealer.
- Improve your credit score first. Your credit is one of the most important factors in the rate a lender offers.6 Watch your credit utilization and your debt-to-income ratio.
- Pick the shortest term you can afford.
- Pay a little extra each month; extra money goes straight to principal.
- If rates drop or your credit improves, look at refinancing before you keep paying the old rate.
Buying vs. Leasing
A loan builds ownership. Every principal dollar is equity you keep. A lease is different: you pay for the car's drop in value plus a rent charge, and you give the car back at the end.7 That rent charge comes from the money factor, and the depreciation piece comes from the residual value.7 Leases often have lower monthly payments and mileage limits, but you own nothing when the term is up.7 If you plan to keep a car for many years, a loan usually costs less over time.
Costs This Calculator Does Not Include
Your real monthly car budget is bigger than the loan payment. Plan for insurance, registration and title fees, dealer doc fees, gas or charging, tires, and repairs.10 Keep an eye on your gas mileage too, since fuel is often the second biggest line item. Many buyers use the rule that all car costs should stay under about 15% to 20% of take-home pay.