Auto Loan Calculator

The right auto loan can lead to the right car. Knowing how much you can afford to pay each month is a powerful tool to have in hand before stepping into any dealership. An auto loan calculator can give you the information you need about what you can afford, what interest you might pay monthly and how much interest you’ll pay over the life of your auto loan. It’s a great way to go into any purchase negotiation with insight into your finances and what you can expect a dealer to offer you. 

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

How to use the auto loan calculator

An auto loan calculator can give you a good idea of what size monthly car payment you can afford by providing helpful information on all aspects of buying a car. The car loan calculator is only an estimate, but it gives you a baseline to operate from. You can play around with the information you enter to get several ideas of what your car loan amount and term might look like.

A car payment calculator like this can help you determine:

  • The amount of money you can afford to borrow
  • The amount of money you feel comfortable borrowing
  • What different interest rates mean for your monthly payments
  • What different loan lengths mean for your monthly payments

For example, say you want to buy a new car that retails for $20,000. You already have $4,000 for your down payment, so you’d only need to borrow $16,000. If you currently have a car, you can also subtract the trade-in value from what you’d need to borrow.

Plug that $16,000 into the calculator. You can play around with loan term length and interest rates to give yourself a big picture view of the payment and interest range you can expect to see at a dealership. 

What you’ll need:

  • How much you need to borrow. Calculating this beforehand will help you use the car loan calculator most efficiently. You can bring several different numbers if you’re looking at different cars. This is the most important part of the equation, as how much you need to borrow impacts other factors in your loan. 
  • How long of a loan term you want. Any dealership will recommend loan terms to you, but by using this auto loan calculator, you can figure out what loan length is most advantageous to your finances. You can calculate what a three-year loan would cost versus a five-year loan. 
  • Whether the vehicle is new or used. This information will impact the overall cost. New cars generally have higher interest rates than older cars that have already lost some resale value. 
  • Interest rate. Interest rates are always a very big part of any loan. Inputting the interest rate can help determine your monthly payment and estimate how much you’ll pay in total on your car loan. 

Getting prequalified: should you consider it? 

Getting prequalified for an auto loan is an easy process that can yield big rewards. Auto loan prequalification is a chance to find out what kind of loan you may qualify for with a specific lender. There is only a soft pull on your credit, so prequalification doesn’t affect your credit score. Once you are preapproved, you will have a loan amount and an interest rate in your hands. You can use this information when shopping for a car to find the best deal for you. 

If you have fair or bad credit, using pre-qualification checks from lenders will also help you determine if they will even extend a bad credit auto loan to you. This will prevent unnecessary hard credit checks during an application process for a lender that won’t lend to you. 

How to get prequalified for an auto loan

You can get prequalified for a car loan online, over the phone or in person. The better your credit score is, the better interest rates and terms you will receive, but having perfect credit is not required for prequalification.  Most banks and credit unions offer auto loans, and you may also be able to get prequalified with a specific dealership. 

The process for prequalification is pretty simple. Lenders use basic financial information about you to determine how much money they want to lend you, and at what interest rate. 

You will need to provide personal information, such as name, address, income and credit report access. Depending on the lender, you may also have to share monthly expenses and current debt totals.  Lenders will run a soft check on your credit to see your history of loans and payments. 

You can and should approach a few different lenders to get prequalified. Shopping around with lenders will allow you to compare offers, and might even give you a bit of negotiation wiggle room with them. This way, you get truly find the best loan for your car. 

Before getting prequalified, check your credit report on your own. Look for any derogatory marks that might be pulling down your credit score, such as late payments or delinquencies. If there are any errors on your report, dispute them and have them removed. This can be done online and should only take a few days. Removing derogatory marks will help your credit score improve, which in turn will help you get a better loan amount and interest rate from any lender. 

The final word 

Using an auto loan calculator is an important step in the car-buying process because understanding what your monthly payments could be will help you determine your budget. Keep in mind that auto loan calculators are estimates, and the exact numbers will vary depending on your final purchase amount, credit score, interest rate and term length.