Many factors go into a new or used car payment. But it’s easy to estimate a car payment by using the Autotrader car payment calculator. It incorporates all the factors you will need to calculate the payment on the vehicle you want to buy, including loan amount and terms plus interest. Our guide on the topic breaks down more helpful information about what you need to know when determining your car payment.
Using the car payment calculator, fill in information like car price, interest rate and loan terms. The calculator also provides a place to add the sales tax rate for your local area. To get closer to seeing the actual payment, be sure to insert your down payment information plus your car’s trade-in value, including any amount you owe. That’s how you calculate monthly car payments. Need help determining the trade-in value of your vehicle? Easy! Use our car valuation tool to get an estimate.
It can be tricky to calculate a lease payment. When dealerships offer car lease deals, they usually calculate it all for you. Car leasing payments are typically lower than new car payments if you were buying the car. Still, the amounts can vary, depending on the size of the down payment on the lease and other factors that you’ll discuss up front.
Banks and other lenders calculate car loan payments using complex formulas. For example, a bank determines the interest rate you qualify for based on your credit score, debt-to-income ratio, and other factors. Suppose you pre-qualify for a car loan and know the interest rate and the sales tax rate in your area. In that case, it’s easy to calculate and estimate your vehicle loan payment using our car calculator tool.
To determine your car payment with interest, you would first shop around with different banks and lenders. That way, you can find the best interest rate you can qualify for based on your credit history and other factors. Using our car payment calculator, you can add interest and the tool amortizes the amount (aka “spreads out the amount over time”) and provides an estimate of what you can expect your car payment to be with interest factored in.
According to credit agency Experian’s State of the Automotive Finance Market, the average new car loan interest rate is 3.48% for buyers with credit scores in the range of 661 to 780. The average used car loan interest rate is 5.49% for purchasers with scores in the same range.
Many dealerships offer special interest rate pricing, including 0% financing on car loans. But not all car buyers can qualify for those low rates. Once you know what interest rate you can qualify for from your lender, you can calculate interest on a car loan, but it entails some math. You will divide the interest rate by 12 for the number of monthly payments in a year. Next, you take that answer and multiply it by the balance of your loan. For example, based on a $40,000 balance with a 3.48% interest rate:
The best vehicle loan interest rate is 0% for new cars. But manufacturers don’t always offer these special promotional deals. For used vehicles, 4.75% is not the lowest interest rate available. Not every new or used vehicle buyer can qualify for the lowest interest rate advertised by the lender either at the dealership or bank. Since each lender uses a different formula to calculate interest rates, it’s best to shop around for the lowest loan terms that meet your needs.
Yes, it’s possible to finance a car for 72 months. However, early in a car loan, most of each monthly payment goes toward interest. It takes several years to build any equity in the vehicle and cars depreciate quickly in the first several years of ownership. As a result, the longer the loan term, the longer it takes to accumulate any value in the car. In other words, you will be upside down in the auto loan until you reach the point where the vehicle is worth something as a trade-in. Read about car financing in our guide to learn more.