How is a monthly car payment calculated?

Monthly car payment = (Loan Amount × Monthly Rate) / (1 − (1 + Monthly Rate)^(−n)), where n is the number of months. The loan amount is the vehicle price minus trade-in value and down payment. For example, a $30,000 car with a $5,000 trade-in and $2,000 down, financed at 6% for 60 months, yields a monthly payment of about $444.

What is a good interest rate for a car loan in 2026?

In 2026, average new car loan rates range from 5% to 8% for buyers with good credit (700+). Buyers with excellent credit (750+) may qualify for rates as low as 4–5%. Used car loans typically run 1–3% higher. Credit unions often offer lower rates than dealerships — always compare at least 3 lenders before accepting financing.

How much does a trade-in reduce my car payment?

Your trade-in value is applied as a down payment, reducing the amount financed. A $5,000 trade-in on a $30,000 car reduces financing to $25,000. At 6% for 60 months, that saves about $97/month compared to financing the full $30,000 with no trade-in.

Should I choose a 48-month or 60-month car loan?

A 48-month loan has higher monthly payments but significantly less total interest paid. A 60-month loan is easier on your budget monthly but costs more overall. On a $25,000 loan at 6%: 48-month payment is $587 (total interest $3,176), while 60-month is $483 (total interest $3,998). Choose the shortest term your budget can comfortably handle.

Auto Loan Calculator — Car Payment with Trade-In 2026

🚗Vehicle & Financing

Vehicle Price

$5,000$200,000

Down Payment

$0$17,500

Trade-In Value

$0$50,000

Annual APR

0.90%25.00%

Loan Term

Financing Breakdown

Vehicle Price$35,000

− Down Payment−$5,000

− Trade-In Value$0

= Amount Financed$30,000

What This Calculator Does

The Auto Loan Calculator estimates your monthly car payment based on the vehicle's price, your down payment, any trade-in value, the loan's APR, and the repayment term. It first works out the amount you actually need to finance, then applies standard loan amortization to that balance.

Use it to compare new vs. used car rates, see how a bigger down payment or trade-in lowers your monthly bill, or test how stretching the loan from 60 to 72 or 84 months changes your total interest cost.

Formula

M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P = price − down payment − trade-in

The financed amount (P) is the vehicle price minus your down payment and trade-in value. The standard amortization formula then spreads that balance plus interest into equal monthly payments.

PAmount financed = price − down payment − trade-in value

rMonthly interest rate (annual APR ÷ 12)

nLoan term in months

MFixed monthly car payment

Examples

Example 1: $35,000 new car, $5,000 down, no trade-in, 7.49% for 60 months

Amount financed = $35,000 − $5,000 = $30,000 (P), monthly rate = 7.49% ÷ 12 = 0.624%, n = 60.

Monthly payment ≈ $600.45 — total interest ≈ $6,027, total loan cost ≈ $36,027.

Example 2: Same car, but with a $4,000 trade-in

Amount financed = $35,000 − $5,000 − $4,000 = $26,000, same 7.49% rate and 60-month term.

Monthly payment ≈ $520.39 — about $80/month less, with total interest around $5,223.

Example 3: Used car loan at a higher rate (9.75%) over 48 months

$18,000 financed for a used vehicle at a typical used-car APR for good credit, n = 48 payments.

Monthly payment ≈ $454.52 — total interest ≈ $3,816.96, total cost ≈ $21,816.96.

Frequently Asked Questions

What is a good APR for an auto loan?+

As of 2026, new car loan APRs average 6–9% for buyers with good credit (720+). Used car rates are typically 1–3% higher. Credit unions often offer the best rates. Always get pre-approved before visiting a dealership.

Should I make a larger down payment on a car?+

Yes — a larger down payment reduces your loan amount, monthly payment, total interest, and protects against negative equity (owing more than the car is worth). 10–20% down is generally recommended, especially for used vehicles that depreciate quickly.

Auto Loan Calculator