Car Payment Calculator

How to use the car payment calculator

1. Fill in the fields — they start with a worked example.
2. Read the answer, and the arithmetic shown beneath it.
3. Copy the results, or adjust the inputs to compare scenarios.

About this tool

The monthly payment on a car is the number dealers negotiate with, because it is the one that can be made to look small. Stretching a loan from four years to seven cuts the payment noticeably while increasing what the car costs in total, so a lower monthly figure is not evidence of a better deal.

This calculator therefore shows the total interest and the total paid alongside the payment. The amount financed is built up in the open too: price, plus sales tax and fees, less the deposit and any trade-in. Advertised payments routinely omit tax and fees, which is how a quote drifts upwards between the forecourt and the paperwork.

The arithmetic is the standard amortising loan formula, the same one behind a mortgage. Each payment covers the interest accrued that month first, and only the remainder reduces the balance — which is why early payments barely dent the principal and why paying a loan off early saves more than the remaining months suggest.

Negative equity is the risk worth naming. A car depreciates faster than a long loan repays, so on a seven-year term you can owe more than the car is worth for years, and an accident or a change of circumstances at that point is expensive.

Common uses

• Comparing a four-year and a seven-year term on the same car.
• Checking a dealer's quoted monthly payment against the full cost.
• Working out how much a larger deposit reduces the interest paid.

Frequently asked questions

Does a longer loan term save money?

It lowers the monthly payment but raises the total cost, because interest accrues over more months. The car also depreciates faster than a long loan repays, so you can owe more than it is worth.

Should tax and fees be included in the loan?

They usually are unless you pay them upfront, which is why an advertised payment based on the sticker price alone comes out low. Both are added to the amount financed here.

How does a trade-in affect the payment?

Its value is subtracted from the amount financed, exactly like extra deposit. If you still owe money on the trade-in, only the equity above that balance helps.