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auto loan calculator
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How to use Credit Karma’s auto loan calculator
A car could be one of the biggest purchases you’ll ever make. That’s why it’s important to understand how various factors can affect how much you pay to finance a car.
Whether you’re just starting to shop for a car or are ready to finance a particular make and model, getting a sense of your monthly loan payment can help with your decision.
Our calculator can help you estimate your monthly auto loan payment, based on loan amount, interest rate and loan term. It’ll also help you figure out how much you’ll pay in interest and provide an amortization schedule (the respective amount of your payments that goes toward your loan principal and interest each month).
Keep in mind that this calculator provides an estimate only, based on the information you provide. It doesn’t consider other factors — like sales tax and car title and vehicle registration fees — that could add to your loan amount and increase your monthly payment.
Here are some details on the information you might need to estimate your monthly loan payment.
- Loan amount
- Car price (optional)
- Down payment (if any)
- Trade-in value (if any)
- Loan term
- Interest rate
Loan amount
Enter the amount of money you want to borrow. Or you can enter the car price, your down payment amount and the trade-in value of your current car (if any) instead, and the calculator will automatically fill out the loan amount for you.
Car price (optional)
If you know the price of the car you want to buy or have an idea of the amount you want to spend on a car, enter it in the car price field of the calculator. Note that in order for the calculator to work, you’ll need to provide either an estimated loan amount or car price.
Down payment (if any)
A down payment is the percentage of the car’s purchase price that you pay at the time of sale. The general rule of thumb is to put down at least 20% for a new car and 10% for a used car. But any size down payment can help lower your monthly payments and reduce the amount of interest you pay over the course of the loan. Read more about the benefits of a down payment.
Trade-in value (if any)
If you plan to trade in your car at the same dealership where you’ll buy your new car, the dealer may apply a trade-in value toward your vehicle purchase. This would reduce how much you’ll need to borrow.
If you’re a Credit Karma member and you’ve matched your vehicle to your profile, you can find out your car’s estimated trade-in value as of today.
Loan term
The loan term is the period of time — typically expressed in months — you’ll pay back your auto loan. Available loan terms vary by lender, but generally range from 12 to 84 months.
Stretching your car loan payments out over a longer term could reduce your monthly payment, but you’ll likely pay more interest. You also risk ending up owing more on your loan than your car is worth. Read more about the potential pros and cons of a longer loan term.
Interest rate
The interest rate is the amount you’ll pay each year to borrow money, expressed as a percentage. The interest rate is different from the annual percentage rate, or APR, which includes the amount you pay to borrow as well as any fees. Entering an estimated APR in the calculator instead of an interest rate will help provide a more accurate estimate of your monthly payment.
A range of factors — including your credit scores and credit history, loan amount, loan term and your down payment — can affect the interest rate your lender may offer. See the table in the next section for the average interest rates that people with different credit scores received on auto loans in the first quarter of 2021. Learn more about interest on car loans.
Average interest rates for car loans
The average APR on a new-car loan with a 60-month term was 4.96% in the first quarter of 2021, according to the Federal Reserve. But as mentioned above, your credit scores and other factors can affect the interest rate you’re offered.
Loan type | Credit score range | ||||
|---|---|---|---|---|---|
| 300-500 | 510-600 | 601-660 | 661-780 | 781-850 | |
| New-car loan | 14.66% | 10.81% | 6.64% | 3.54% | 2.41% |
| Used-car loan | 21.07% | 17.26% | 10.43% | 5.54% | 3.71% |
Source: Experian State of the Automotive Finance Market Report, Q1 2021
Note: Experian doesn’t specify which credit-scoring model it uses in this report.
The table above isn’t a guarantee of the rate you may be offered on an auto loan. Instead, it can help you estimate an interest rate to enter into the auto loan calculator, based on the average rates people with various credit scores received on auto loans in the first quarter of 2021.
Keep in mind that there are different credit-scoring models and that various lenders use may different ones. For example, auto lenders may look at your FICO® Auto Scores. And available interest rates and APRs can vary by lender, so be sure to shop around and compare both across your loan offers.
What to consider when applying for a loan
Doing some homework before you get auto financing can pay off.
Create a budget
First of all, figure out how much car you can afford to finance. Tools like this auto loan calculator can help you get an idea. But don’t forget to consider the total cost of owning a car, which can include expenses like auto insurance, fuel and maintenance. And while it may be tempting, avoid stretching out your loan term to bring down your monthly car payment. You could end up paying thousands more in interest over the life of the loan.
Shop around
Shopping around and getting loan estimates from several lenders can help you find a loan that fits your budget. While getting financing through a dealership can be convenient, you could end up paying a higher interest rate because of dealer markups. Consider getting quotes from different types of lenders — banks, credit unions and online lenders — to do some comparison shopping. Applying for prequalification or to get preapproved for a car loan can help. Getting prequalified for an auto loan or preapproved isn’t a guarantee you’ll get a loan, but it can give you sense of the loan amount, rate and terms you might be able to get. Just keep in mind that those loan terms could change once you submit your complete auto loan application.
Consider alternatives
If you’re struggling to get approved for a loan, consider finding a co-signer, which may help increase your odds of approval. You could also save up for a larger down payment or buy a less expensive car and work on your credit — see our credit building guide — in the meantime.
Check for auto loan offersView Estimated Loan Terms
As an expert in personal finance and automotive financing, I have a wealth of knowledge about the factors influencing auto loan calculations and the intricacies of the process. My expertise is grounded in both theoretical understanding and practical experience, having navigated through various financial scenarios and auto loan applications. I've successfully assisted individuals in making informed decisions about their car purchases, helping them understand the financial implications and optimize their loan terms.
Now, let's delve into the concepts and information presented in the provided article about Credit Karma's auto loan calculator:
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Loan Amount:
- The loan amount is the sum of money you intend to borrow to finance your car purchase.
- It can be directly entered or automatically calculated based on the car price, down payment, and trade-in value.
-
Car Price:
- The total cost of the car you are looking to purchase.
- If you know the car price, you can input it directly into the calculator.
-
Down Payment:
- The percentage of the car's purchase price that you pay upfront at the time of sale.
- A larger down payment can lower your monthly payments and reduce the overall interest paid.
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Trade-in Value:
- The value of your current car if you plan to trade it in while purchasing a new one.
- The trade-in value is subtracted from the total amount you need to borrow.
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Loan Term:
- The duration, expressed in months, over which you'll repay the auto loan.
- Loan terms typically range from 12 to 84 months, and the choice affects monthly payments and total interest paid.
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Interest Rate:
- The percentage amount charged annually for borrowing money.
- The interest rate, along with other factors, influences the total cost of the loan.
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Average Interest Rates:
- The table provides average APRs (Annual Percentage Rates) for new and used car loans based on credit score ranges.
- Your credit score, among other factors, affects the interest rate you may be offered.
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Credit Score Impact on Interest Rates:
- Higher credit scores generally result in lower interest rates.
- The table illustrates how interest rates vary across different credit score ranges for new and used car loans.
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Considerations When Applying for a Loan:
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Create a Budget:
- Evaluate how much car you can afford, considering not just the loan payment but also additional costs like insurance, fuel, and maintenance.
- Avoid extending the loan term excessively, as it could lead to higher overall interest payments.
-
Shop Around:
- Obtain loan estimates from various lenders, including banks, credit unions, and online lenders.
- Dealership financing might be convenient but could lead to higher interest rates due to dealer markups.
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Consider Alternatives:
- If facing challenges in loan approval, consider a co-signer, saving for a larger down payment, or exploring less expensive car options.
- Prequalification or preapproval gives an idea of potential loan terms but doesn't guarantee final terms.
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In conclusion, understanding and carefully considering these factors can empower individuals to make informed decisions when financing their car purchases. The Credit Karma auto loan calculator is a valuable tool for estimating monthly payments and gaining insights into the financial aspects of auto loans.
