Introduction

This auto loan calculator is a perfect way for you to understand the total cost over the lifetime of your car loan or finance. Often times a deal on an auto loan with a higher period count might sound like a good idea because you are paying less per month, but the truth is that you will end up paying more interest over the life of the loan. Use this calculator to understand the effect that an interest rate, number of months, and even the down payment amount can have an effect on your total principal and interest payments.

Inputs:

Car Price

The price of the car is the bottom line total cost of the vehicle that you are trying to purchase. This includes but is not limited to finance charges, sales tax, market adjustments, dealership markups, and any other fees that are added on.

Down Payment

A down payment is a full amount that you pay after you sign a finance agreement. The more of a down payment you put down, the less you have to borrow from the dealership, bank, or any other financial institution. The less you borrow, the less you pay in interest. Therefore, it might be reasonable to assume that you should be putting down as much money as possible in order to reduce the amount of interest that you have to pay on your auto loan. However, you need to consider that the more you put down, the less disposable cash you have in your bank account, and you need to have an appropriate amount of emergency funds, or else you will have to suffer greatly in case of an unforeseeable event.

Loan Amount

After deciding on the down payment, the amount of your loan will be the car price minus the down payment. This is ultimately going to be the amount that will be considered a loan from your financial institution.

Number of months

The number of months on an auto finance agreement is usually 36, 60, 72, or 84 months in the United States, with the most popular choice being 72 months or 6 years.

Annual Interest Rate

The annual interest rate, also referred to as APR, is given to you by your financial institution and is usually less than 10%.

Outputs:

Payment Amount

This is how much you will be paying every single month for the life of the agreement. You are legally obligated to make timely payments to your financial institution or else they will seek remedies in case you are insolvent.

Total Principal & Interest

This is a very important amount, and this is because this is the total cost that you will be paying for the next few years. Depending on the interest rate and the number of months the loan is for, you might be seeing $10,000 or even up to $40,000 of interest paid, depending on the price of the automobile.

Excel Template

If you wish to download an excel template, please click here.