What is a good interest rate for a car loan?

As of 2026, good car loan rates range from 4-7% for new cars and 5-9% for used cars, depending on your credit score. Excellent credit (750+) qualifies for the lowest rates. Credit unions often offer better rates than dealership financing.

Should I choose a longer or shorter car loan?

Shorter loans (36-48 months) have higher monthly payments but save thousands in interest. A 60-month loan on $30,000 at 6% costs $3,800 more in interest than a 36-month loan. Only extend to 60+ months if you need the lower payment to stay within budget.

How much should I put down on a car?

Aim for at least 20% down on a new car and 10% on a used car. A larger down payment reduces your loan amount, monthly payment, and total interest. It also helps avoid being "upside down" (owing more than the car is worth) as the vehicle depreciates.

What is the total cost of owning a car beyond the loan?

Beyond the loan payment, budget for insurance ($1,200-$2,400/year), fuel ($1,500-$3,000/year), maintenance ($500-$1,000/year), registration, and depreciation. The average total cost of car ownership is roughly $9,000-$12,000 per year. Factor these into your overall budget before committing to a loan.

Should I refinance my car loan?

Refinancing makes sense if interest rates have dropped since you took out the loan, your credit score has improved a lot, or you want to change your loan term. Even a 1-2% rate reduction on a $25,000 balance can save $500-$1,000 over the life of the loan. Check that refinancing fees do not outweigh the savings.

Car Loan Calculator

Estimate your monthly car payment based on vehicle price, down payment, trade-in value, interest rate, and loan term. See the full cost breakdown including total interest paid.

By InstaCalcs Team·Reviewed April 25, 2026·Report an issue

Vehicle Price

Price before down payment and trade-in

Down Payment ($)

Amount to pay upfront

Trade-in Value ($)

Optional trade-in value

Sales Tax Rate (%)

Local sales tax rate (0-10%)

Interest Rate (APR %)

Annual percentage rate

Loan Term (Months)

Total loan duration

Monthly Payment

$586.98

for 60 months

Payment Breakdown

Principal (85.2%)

Interest (14.8%)

Loan Amount

$30,000.00

Principal financed (vehicle price - down payment - trade-in + tax)

Total Interest Paid

$5,219.07

Interest cost over loan term

Total Cost of Loan

$35,219.07

Total amount paid over loan term (monthly payment × number of months)

Note: This calculator provides estimates based on standard amortization. Actual payments may vary due to fees, insurance, registration, and other lender-specific charges.

How to use

Enter the vehicle price, your down payment amount, and any trade-in value. Set the interest rate (APR) and choose a loan term in months. The calculator shows your estimated monthly payment, total interest, and full cost of the loan. Adjust the term length to see how it affects your payment and total cost.

Formula

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Where M is the monthly payment, P is the loan principal (price minus down payment and trade-in, plus tax), r is the monthly interest rate (APR/12), and n is the number of monthly payments. For example, a $30,000 loan at 6% APR for 60 months gives a monthly payment of $579.98.

When this calculator helps

A car is one of the biggest purchases most people make, and the loan terms you choose can mean thousands of dollars in savings or extra costs. This calculator helps first-time buyers, families upgrading vehicles, and anyone comparing financing options see the true cost of their loan before signing anything. By adjusting the down payment, term length, and interest rate, you can find the combination that fits your monthly budget while minimizing total interest paid over the life of the loan.

Examples

Example 1: New Car with 20% Down

Buying a $35,000 new car with $7,000 down (20%) at 5.5% APR for 60 months. The loan amount is $28,000, monthly payment is $535, total interest is $4,098, and total cost is $39,098. The 20% down payment avoids negative equity from day one.

Example 2: Used Car Budget Purchase

A $15,000 used car with $2,000 down and a $3,000 trade-in at 7% APR for 48 months. The loan amount is $10,000, monthly payment is $239, total interest is $1,488, and total cost is $16,488. The shorter term and lower principal keep interest manageable.

Example 3: Impact of Loan Term Length

On a $25,000 loan at 6% APR: a 36-month term costs $760/month with $3,367 total interest. A 72-month term costs $414/month but $4,830 in total interest, $1,463 more. The longer term has lower payments but costs a lot more overall.

Things to watch

•Get pre-approved at your bank or credit union before visiting the dealership, dealer financing markups can add 1-2% to your rate.
•Keep your total car payment (including insurance) below 15% of your monthly take-home pay to avoid financial strain.
•Avoid 72 or 84-month loans when possible, they often lead to negative equity since cars depreciate faster than you pay down the loan.
•Factor in sales tax, registration fees, and dealer fees when budgeting, these can add 8-12% to the purchase price depending on your state.
•A larger down payment not only reduces your monthly payment but also gives you immediate equity, protecting you if the car is totaled.

Sources and methodology

Last reviewed: April 25, 2026. We review formulas, default assumptions, and examples against public references when a formal source applies.

Method: This calculator uses the formula explained on this page, then checks default assumptions and examples against the references listed below.

•Auto loan key terms, Consumer Financial Protection Bureau
•What is included in the monthly auto loan payment?, Consumer Financial Protection Bureau

Found something off? Send a correction with the page URL, inputs, result, and expected result.

Common questions

What is a good interest rate for a car loan?: As of 2026, good car loan rates range from 4-7% for new cars and 5-9% for used cars, depending on your credit score. Excellent credit (750+) qualifies for the lowest rates. Credit unions often offer better rates than dealership financing.
Should I choose a longer or shorter car loan?: Shorter loans (36-48 months) have higher monthly payments but save thousands in interest. A 60-month loan on $30,000 at 6% costs $3,800 more in interest than a 36-month loan. Only extend to 60+ months if you need the lower payment to stay within budget.
How much should I put down on a car?: Aim for at least 20% down on a new car and 10% on a used car. A larger down payment reduces your loan amount, monthly payment, and total interest. It also helps avoid being "upside down" (owing more than the car is worth) as the vehicle depreciates.
What is the total cost of owning a car beyond the loan?: Beyond the loan payment, budget for insurance ($1,200-$2,400/year), fuel ($1,500-$3,000/year), maintenance ($500-$1,000/year), registration, and depreciation. The average total cost of car ownership is roughly $9,000-$12,000 per year. Factor these into your overall budget before committing to a loan.
Should I refinance my car loan?: Refinancing makes sense if interest rates have dropped since you took out the loan, your credit score has improved a lot, or you want to change your loan term. Even a 1-2% rate reduction on a $25,000 balance can save $500-$1,000 over the life of the loan. Check that refinancing fees do not outweigh the savings.