What is the Car Loan Calculator?
This tool estimates the fixed monthly payment on a car (auto) loan and shows how much you will pay in total and how much of that is interest. It uses the standard fully-amortizing fixed-rate loan formula, so although amounts are shown in dollars, the math applies to any currency. Enter the amount financed, the loan term, and the annual interest rate to see your numbers instantly.
How to use it
Enter three values: Loan Amount (the principal you actually borrow), the Loan Term with its unit (months or years), and the stated Annual Interest Rate as a percent. The calculator returns your monthly payment, the total of all payments, the principal repaid, and the total interest. Note: this is the financed loan only — it does not add a down payment or sales tax. Enter the real amount financed (purchase price minus down payment, plus any taxes or fees rolled into the loan).
The formula explained
First the inputs are normalized: the number of payments is n (term in months, or term in years times 12), and the monthly rate is \(i = \text{annual rate} / 100 / 12\). The payment is then $$M = P \cdot \frac{i (1 + i)^n}{(1 + i)^n - 1}.$$ When the rate is 0%, this would divide by zero, so the payment is simply \(P / n\). Total paid equals \(M \times n\), and interest paid equals total paid minus the principal \(P\).
Worked example
Borrow $25,000 for 5 years at 5% annual interest. Then \(n = 60\) and \(i = 0.05/12 = 0.0041667\). With \((1+i)^{60} = 1.283359\), the payment is $$M = 25000 \times 0.0041667 \times \frac{1.283359}{0.283359} = \$471.78.$$ Total paid = \(471.78 \times 60 = \$28{,}306.85\), and interest paid = \(28{,}306.85 - 25{,}000 = \$3{,}306.85\).
FAQ
Does it include taxes, fees, or a down payment? No. Enter the amount actually financed; subtract any down payment and add any taxes or fees that are rolled into the loan.
How is the interest rate applied? The annual rate is treated as a nominal rate compounded monthly (rate divided by 12 per period), the standard auto-loan convention.
What if the rate is 0%? The payment is just the loan amount divided by the number of months, and total interest is zero.
