Car Loan Calculator

You're at the dealer, the salesperson says '$399 a month for 72 months.' Sounds reasonable until you do the actual math: that's $28,728 total on a $24,000 car. Plug in price, down payment, trade-in, rate, and term, and see what you're really committing to.

The calculator breaks out monthly payment, total interest, and the all-in total over the life of the loan. Trade-in value reduces the principal, as does down payment — both change the picture more than people expect.

Longer terms (72, 84 months) make payments look small but stretch the depreciation past the loan payoff. You can be six months into year five still owing more than the car is worth. The numbers won't lie about that.

The calculation is the same amortization formula used for any fixed-payment loan, but auto loans have specific quirks worth understanding. Interest is computed on the remaining principal each month; early payments are mostly interest, late payments are mostly principal. So a $24,000 loan at 7% over 60 months has monthly payment around $475, total paid is roughly $28,500, and interest is about $4,500. The first year, you pay closer to $1,500 in interest and $4,200 in principal — by the last year, those numbers have inverted.

A worked example showing depreciation versus payoff: a new $35,000 car financed at 6.5% over 72 months has a monthly payment around $588. After three years, you've paid down maybe $14,500 of principal — outstanding balance is around $20,500. Meanwhile, the car's market value has dropped to roughly $19,000 (typical new-car depreciation is 50% over five years, front-loaded). You're $1,500 underwater. Sell the car and you owe the lender $1,500 in cash to close out, on top of giving up the asset. That gap is how 'negative equity' becomes a real problem if life forces you to sell early.

Where the calculator's number diverges from reality: dealer markup, dealer-installed accessories, extended warranties bundled into the loan, and fees rolled into the amount financed. A dealer offering '0% APR' often offsets it through MSRP-level pricing rather than the discounted price an outside lender's preapproval would give you. Run the calculator with both scenarios — dealer-financed at 0% on the higher price versus bank-financed at 6% on the negotiated price — and compare total paid. Sometimes the 0% wins, often it doesn't.

A useful reframe: the question 'can I afford the monthly payment' is the wrong question. The right question is 'can I afford to be underwater on this loan if I need to sell early.' If your job is stable, your commute is fixed, and you'd keep this car for at least the loan term anyway, the underwater period doesn't matter. If any of those assumptions wobble, the conservative move is shorter terms or larger down payment to stay above water as long as possible.