Our free car payment calculator provides a monthly payment amount and total loan cost based on your loan amount, repayment term and interest rate. You can also use the calculator to compare multiple loan offers to get a better idea of which one is best for you.
†The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.
How this Auto Loan Calculator Works
The main purpose of this calculator is to help you compare estimated payments for loans with different term lengths and interest rates. When you apply for a loan, you’ll get to choose a term length, which is the number of months you’ll make payments. Your annual percentage rate (APR) may change based on the lender, your creditworthiness and your desired repayment term.
You can add up to three loan options at a time to compare costs. Once you enter the details for each one, click Calculate to see a breakdown of your monthly payment, along with information about how much you’ll pay in interest and your payoff date.
Here is an overview of each field:
- Loan amount: This is the total amount of money you plan to borrow. You can calculate this by taking the total vehicle price (including taxes, fees and other add-ons) and subtracting your down payment and any additional deductions like a vehicle trade-in.
- Interest rate: When you apply for a loan, you’ll be assigned an interest rate that can vary depending on how the lender rates your creditworthiness.
- Term (in months): When you choose the term of your loan, it will likely be in an interval of 12 months. The average auto loan term is nearly 72 months, but common auto loan terms range from 36 months up to 84 months.
Current Car Loan Interest Rates
Car loan interest rates are influenced by a number of factors, such as your credit score, debt-to-income ratio, repayment term, loan amount, economic conditions and whether the vehicle is new or used.
That said, here are the current average interest rates for each credit score range:
| Average Auto Loan Interest Rate by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car APR | Used Car APR |
| Super prime (781 - 850) | 5.25% | 7.13% |
| Prime (661 - 780) | 6.87% | 9.36% |
| Near prime (601 - 660) | 9.83% | 13.92% |
| Subprime (501 - 600) | 13.18% | 18.86% |
| Deep subprime (300 - 500) | 15.77% | 21.55% |
Where to Get a Loan: Dealership vs. Direct Lending
You generally have two options for financing your vehicle purchase: dealer-arranged financing and direct lending. Here's a quick summary of how each option works, along with its benefits and drawbacks.
Dealer-Arranged Financing
With this option, you don't have to worry about financing until after you've chosen a model and negotiated a price. You'll fill out a credit application at the dealership, and they'll submit it to multiple lenders and give you the best offer.
Dealer-arranged financing shifts a lot of the legwork of shopping around to the dealer and can be beneficial if you have little time to do it yourself. It can also be worth it if you qualify for a special financing deal on a new car.
That said, your interest rate may be higher than what the lender quotes the dealer, with the additional interest compensating the dealer for handling the process.
Direct Lending
With a direct auto loan, you're working directly with the lender rather than going through a dealer. Start by getting preapproved with multiple lenders so you can compare your offers side by side.
Once you choose a lender, you can take your preapproval letter to the dealer. At that point, you can also fill out another credit application to see if the dealer can provide you with a better offer. If not, you'll finalize the loan with the lender after you reach an agreement with the dealer.
Direct lending can potentially give you a better interest rate because there's no added margin to compensate the dealer. However, the process can be more time-consuming.
How to Get a Lower Monthly Payment
The average monthly payment is $734 for a new car loan and $525 for a used car loan, according to Experian data. However, there are steps you can take to reduce your monthly payment and minimize the potential strain on your budget.
Here are some tips on how you can lower your car payment:
- Pick a cheaper car. One easy way to lower your payment is by reducing the cost of the car, which will lower your loan amount. The lower your loan amount, the less you’ll have to pay each month—and the less you’ll pay overall in interest.
- Save for a larger down payment. Your down payment is the money you pay upfront when you purchase the car. If you aren't in a rush to get a new car, saving for a bigger down payment will reduce your loan amount and could help you lower your monthly payment. Furthermore, reducing the size of your loan with a big down payment may help you qualify for a lower interest rate.
- Shop around. When you get approved for an auto loan, the interest rate, or APR, represents the cost of borrowing money to pay for your car. However, rates can vary by lender, so it's crucial that you apply with at least a few lenders to ensure you're getting the best offer.
- Opt for a different term. Longer repayment terms typically translate to lower monthly payments because you're taking longer to pay down your loan. While that translates to more total interest charges—and potentially a higher interest rate—it can make your loan more affordable on a monthly basis.
- Improve your credit score.If you don't urgently need a new car, consider taking time to improve your credit before you begin the buying process. You can start by getting your Experian credit report and FICO® Score☉ for free. Review your score and report to get a feel for where you stand and also identify areas where you can improve.
- Negotiate the price. Before you head to the dealership, research the price for the model you have your eye on using a valuation tool like Kelley Blue Book or Edmunds. Then, compare prices for similar models in your area. This can help you negotiate the price, potentially saving you some money.
If you have sufficient savings, you may also consider buying what you can afford in cash. That way, you won't have a monthly payment at all. However, it's important to weigh the pros and cons of buying in cash before you move forward.
Leasing vs. Financing
If you're planning to buy a new car, you may have the choice between financing it with a loan and leasing it. On average, lease payments tend to be cheaper than loan payments. Here's a comparison of the average monthly payment for each:
Average New Vehicle Monthly Payment
That said, there are both benefits and drawbacks to consider with each one. Here's what to keep in mind:
| Leasing vs. Financing | |
|---|---|
| Leasing | Financing |
| Terms range from two to four years | Terms range from one to seven years |
| Lower monthly payments | Higher monthly payments |
| You don't own the vehicle | You'll fully own the vehicle when you pay off the loan |
| Generally doesn't build equity | Builds equity with each payment |
| Carries annual mileage restrictions | No mileage restrictions |
| May charge a fee for excessive wear and tear | No fees for excessive wear and tear |
| Requires full coverage auto insurance | Requires full coverage auto insurance |
Learn more about financing versus leasing to determine which option is best suited for your situation and priorities.
Other Costs to Consider When Buying a Car
When you buy a vehicle, the sales price isn't the only expense you'll need to consider. Here are some others to keep in mind as you estimate your total cost:
- Title and registration fee: If you're buying from a dealer, they may offer to handle title and registration for you, passing on the fees that your state’s department of motor vehicles (DMV) would charge you. However, you may be able to opt to go directly through the DMV on your own. Depending on where you live, registration fees can range from under $50 to more than $250.
- Sales tax: The sales tax rate will depend on where you live, and it may include state, county and even city taxes. It's often the biggest added cost when buying a car.
- Documentation fee: Many dealers will also charge this fee to cover the cost of handling the sales contract and other paperwork. The cost will depend on where you live, as some—but not all—states limit what dealers can charge.
- Add-ons: While not required, some dealers may also suggest certain add-ons, such as service or maintenance contracts, gap insurance, paint jobs and more. It's best to try to minimize these extra costs.
- Insurance: Auto insurance is another significant cost of owning a car. The insurance rate you qualify for will depend on several factors, including the vehicle, where you live, your age and gender, your expected annual mileage, your credit history and more. Take your time to shop around for coverage to ensure you get the best rate possible.
- Fuel: Fuel is another major ongoing cost to consider, and some vehicles are much more fuel-efficient than others. You can estimate your fuel costs by researching the fuel efficiency for each model you're considering and approximating your expected annual mileage.
Focus on Building Credit to Minimize Your Costs
Having a good credit score can help you qualify not only for a lower interest rate but also for a lower auto insurance rate. With free credit monitoring from Experian, you can evaluate your creditworthiness and determine where to make improvements.
Experian can also help you compare auto insurance quotes from more than 40 top insurers, helping you maximize your savings.