Calculate Your Monthly Car Payment
Estimate monthly auto loan payments by price, down payment, interest rate, and loan term.
How Car Payments Are Calculated
The monthly car payment formula uses amortization: M = P × [r(1+r)^n] / [(1+r)^n - 1] where M = monthly payment, P = principal (loan amount), r = monthly interest rate, n = number of payments. Your loan amount is the vehicle price plus tax minus your down payment and trade-in value.
How to Get the Best Auto Loan Rate
Average new car loan rates in 2026: 720+ credit score: 5-7% APR. 680-719: 7-9%. 620-679: 9-13%. Below 620: 13-20%+. Get pre-approved by your bank or credit union before visiting the dealer — dealer financing is typically 1-2% higher. Credit unions consistently offer the best auto loan rates, often 0.5-1.5% below banks.
The 20/4/10 Rule
Financial advisors recommend the 20/4/10 rule for car purchases: 20% down payment, 4-year (48 month) maximum loan term, and total transportation costs under 10% of gross income. Following this rule prevents being "underwater" (owing more than the car is worth) and keeps transportation costs manageable.
The average American spends $12,182 per year on vehicle ownership (payment + insurance + gas + maintenance). That is $1,015/month — second only to housing as the largest household expense. Buying a reliable 2-3 year old certified pre-owned vehicle saves 30-40% compared to new.
