Before you step into a dealership, know your numbers. Trade-in value, sales tax, and loan terms — see the real monthly payment with no surprises.
M = P × [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]The monthly auto loan payment (M) uses the standard amortization formula. The principal (P) is the vehicle price plus sales tax minus down payment and trade-in value. The monthly interest rate (i) is the annual rate divided by 12, and n is the loan term in months.
| Symbol | Meaning |
|---|---|
| M | Monthly payment (principal + interest) |
| P | Principal loan amount (vehicle price + tax - down payment - trade-in) |
| i | Monthly interest rate (annual rate ÷ 12) |
| n | Loan term in months |
Our calculations are based on established financial and scientific formulas. The following sources inform the default values and methodology used in this calculator:
Longer auto loan terms lower your monthly payment, but they increase the total interest you pay and slow down how quickly you build equity in the car. Because vehicles lose value fastest in the first few years, a longer loan also raises the risk of being "underwater" — owing more than the car is worth. Comparing a 60-month and a 72-month term on the same loan reveals the real tradeoff between cash flow and cost.
| Factor | 60-Month Loan | 72-Month Loan |
|---|---|---|
| Monthly payment | Higher (~$573 on $30k @ 5.5%) | Lower (~$490 on $30k @ 5.5%) |
| Total interest paid | Less (~$4,380) | More (~$5,280, about $900 extra) |
| Equity position | Builds equity faster; paid off before heavy depreciation | Slower equity; risk of being underwater longer |
| Risk | Lower — fully paid in 5 years | Higher — car may depreciate below the loan balance |
| Best for | Buyers who can afford the payment and want to save | Buyers who need a lower payment to fit their budget |
Loan amount: $30,000 | APR: 5.5% 60-Month Term: • Monthly payment: $573 • Total paid over 5 years: $34,380 • Total interest: $4,380 • Loan fully paid off at month 60 72-Month Term: • Monthly payment: $490 • Total paid over 6 years: $35,280 • Total interest: $5,280 • Loan fully paid off at month 72 Comparison: • The 72-month loan saves $83/month in cash flow • But it costs $900 more in total interest Equity after 3 years (car worth ~$17,000): • 60-month loan balance: ~$13,000 -> equity ~$4,000 • 72-month loan balance: ~$16,250 -> equity ~$750 The shorter term keeps you comfortably above water.
A 60-month loan is almost always the better financial choice when you can afford the payment: you pay less interest, build equity faster, and avoid the risk of owing more than the car is worth. Reserve 72-month (or longer) loans for when the lower payment is genuinely necessary to make the purchase affordable — and even then, consider a cheaper car rather than stretching the term.
Trading in your current vehicle is one of the most effective ways to reduce your auto loan amount. Below we show how different trade-in values impact your monthly payment and total interest on a $35,000 vehicle with 5.5% APR over 60 months.
| Trade-In Value | Loan Amount | Monthly Payment | Total Interest | Interest Saved |
|---|---|---|---|---|
| $0 | $35,000 | $668 | $5,080 | $0 |
| $2,000 | $33,000 | $630 | $4,800 | $280 |
| $5,000 | $30,000 | $573 | $4,380 | $700 |
| $8,000 | $27,000 | $516 | $3,960 | $1,120 |
| $10,000 | $25,000 | $477 | $3,620 | $1,460 |
A $5,000 trade-in saves you $95 per month and $700 in total interest over 5 years. Plus, in most states, your trade-in value reduces the sales tax you pay — a $5,000 trade-in in a 6% tax state saves an additional $300.
Your credit score is the single biggest factor determining your auto loan APR. The difference between a great and poor credit score can cost thousands in extra interest. Below are typical auto loan rates by credit tier for a 60-month new car loan.
| Credit Tier | Credit Score Range | Avg APR (New) | Avg APR (Used) | Monthly Payment ($30k/60mo) | Total Interest |
|---|---|---|---|---|---|
| Excellent | 780-850 | 4.5% | 5.0% | $559 | $3,540 |
| Good | 700-779 | 5.5% | 6.0% | $573 | $4,380 |
| Fair | 660-699 | 7.5% | 8.5% | $601 | $6,060 |
| Poor | 620-659 | 11.0% | 13.0% | $652 | $9,120 |
| Bad | 500-619 | 15.0% | 18.0% | $714 | $12,840 |
Improving your credit score from Fair (660) to Good (700) can save you 2 percentage points on your APR — that is $28/month and $1,680 over 5 years on a $30,000 loan. Before applying for an auto loan, check your credit report for errors, pay down credit card balances, and avoid applying for new credit in the 6 months before car shopping. Use this auto loan calculator to compare rates across different credit tiers.
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Rates verified 2026-10-09 · Sourced from official seller fee schedules