NerdWallet Auto Loan Calculator

Estimate Your Car Payments with Precision

Buying a car is one of the most significant financial decisions you'll make. Whether you're eyeing a brand-new SUV or a reliable used sedan, understanding the true cost of your auto loan is crucial. Our NerdWallet-style Auto Loan Calculator is designed to give you a comprehensive view of your potential car payments, total interest, and overall loan cost.

Unlike simple calculators that only show a monthly payment, this tool factors in critical details like trade-in value, sales tax, and fees. By accounting for these variables, you can avoid surprises at the dealership and negotiate with confidence.

How to Use This Auto Loan Calculator

Getting an accurate estimate is easy. Here’s a breakdown of the inputs you'll need:

1. Vehicle Information

• Car Price: The negotiated price of the vehicle. Do not use the MSRP; aim for the "out-the-door" price if possible, or start with the sticker price.
• Interest Rate (APR): Your estimated annual percentage rate. This depends on your credit score. As of late 2024, average rates are around 6-7% for new cars and 10-12% for used cars. Learn more about auto loan rates at the CFPB.
• Loan Term: How long you will take to repay the loan. Common terms are 36, 48, 60, 72, or 84 months.

2. Down Payment & Trade-In

• Down Payment: Cash you pay upfront. A larger down payment reduces your monthly payment and total interest.
• Trade-In Value: The amount the dealer offers for your old car. You can estimate this using online guides. Understanding trade-in value is key to getting a fair deal.
• Amount Owed on Trade: If you still have a loan on your trade-in, enter the payoff amount here. The calculator will determine if you have positive or negative equity.

3. Taxes & Fees (Advanced)

• Sales Tax Rate: Your local sales tax rate. This can significantly add to the loan amount.
• Title & Reg Fees: Estimated costs for registration and title transfer, usually $100-$500 depending on your state.

Understanding Your Results

Once you calculate, you'll see three key figures:

• Monthly Payment: The amount you must pay each month. Ensure this fits comfortably within your budget (ideally less than 10-15% of your take-home pay).
• Total Loan Amount: The actual amount you are borrowing after down payment and trade-in are applied, plus any taxes/fees rolled into the loan.
• Total Interest: The cost of borrowing money. This is "wasted" money that doesn't go towards the car's value.

Smart Car Buying Tips

The 20/4/10 Rule

Financial experts often recommend the 20/4/10 rule to keep car costs manageable:

• 20% Down: Put at least 20% down to avoid being "underwater" (owing more than the car is worth) as soon as you drive off the lot.
• 4 Years: Limit your loan term to 4 years (48 months). This minimizes interest and ensures you pay off the car before it depreciates too heavily.
• 10% of Income: Keep your total car expenses (payment, insurance, gas) under 10% of your gross monthly income.

Beware of Long Loan Terms

It's tempting to stretch a loan to 72 or 84 months to get a lower monthly payment. However, this is a trap. Long loans drastically increase your total interest paid and keep you in debt longer. You also risk having negative equity for years, making it hard to trade in the car later without rolling over debt.

Pre-Approval is Power

Before you step foot in a dealership, get pre-approved for a loan from a bank or credit union. This gives you a baseline interest rate and forces the dealer to beat it. It also sets a firm budget, preventing you from being upsold.

Common Questions (FAQ)