Car Loan Calculator

Working out the amount financed

The amount you actually borrow is the vehicle price (plus any sales tax) minus your down payment and trade-in value:

loan = price + tax − down payment − trade-in

The monthly payment formula

Car loans are amortized, meaning every payment is identical and gradually shifts from mostly interest to mostly principal. The fixed monthly payment is:

M = P × r × (1 + r)n ÷ ((1 + r)n − 1)

• P — the amount financed (principal).
• r — the monthly interest rate, i.e. the annual APR ÷ 12 ÷ 100.
• n — the total number of monthly payments (term in months).

When the interest rate is 0%, the payment is simply the loan divided by the number of months.

Building the amortization schedule

For each month, the interest portion is the remaining balance × the monthly rate. The rest of the payment reduces the principal, and the balance carries forward to the next month. Early on, most of your payment is interest; later, most of it pays down the car.

Worked example

A $30,000 car with $5,000 down at 6.9% APR over 5 years finances $25,000 across 60 payments:

r = 6.9 ÷ 12 ÷ 100 = 0.00575 → M ≈ $493.54 / month, with roughly $4,612 paid in total interest.

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