Auto Payment Calculator

Auto Loan Payment Basics

This auto payment calculator is designed to aid you in determining whether your can afford the purchase of your next car. The calculator factors that will determine your monthly payment for transportation including the auto purchase price, your down payment, the auto loan interest rate and its term length. In addition, you will need to add to your monthly budget calculations related expenses such as auto registration fees, taxes, insurance, maintenance and fuel charges.

Owning an auto in 2019 is a major investment. According to ValuePenguin, US consumers in 2019 borrow $30,621 for a new auto loan and $19,339 for a used auto loan. The average length for a new auto loan is 68 months, with average APRs ranging between 3.71% (36 months) to 3.93% (60 months). Interest rates will vary based on the financial lender (auto dealership, traditional bank or credit union), the consumer’s credit score and type of auto being purchased.

Calculate Your Monthly Auto Payment

To use this auto payment calculator, enter the auto purchase price, your initial deposit, the auto loan interest rate and term of the loan. The calculated monthly auto payment is only your financial costs. You will need to add your auto registration fees, insurance, fuel, parking and maintenance to determine your total cost of auto ownership.

As an example, a borrower purchasing an auto valued at $20,000, placing a deposit of $4,000 (cash or trade-in), with an auto loan at 4% APR, for 60 months, will have a monthly auto finance payment of $295/Month.

You will find that the most important factors affecting your auto financial payment is the total amount of the auto loan and the term length of the loan.

Does It Fit Your Budget?

Review Your Budget

The result of the auto payment calculator is a first step on estimating your monthly budget for your auto transportations costs. There are various assumptions that you need to make that will affect your monthly auto payment calculations including:

  • Will you be purchasing a new or used auto? A new auto can be financed for a longer period of time and generally at a lower interest rate versus a used auto.
  • How much of an initial deposit will you make toward the auto purchase price? The higher the initial deposit, the less you need to finance. This can result in a shorter auto loan term and lower monthly payment.
  • How long do you want to finance your auto loan? The shorter the term of the auto loan, the less interest cost, but a higher monthly payment.
  • What type of auto loan interest rate can you qualify for? The lower the interest rate, the less interest cost of the auto loan.
  • Do you plan on keeping the auto after paying off the auto loan? The longer you keep the auto, the more time you can avoid monthly auto payments and insurance premiums.

Once you have a “realistic” auto payment calculation, you will need to add: auto taxes, insurance, maintenance, fuel and parking/toll charges.

Now the hard part. Does the total monthly auto costs fit your budget? Remember, you will be paying this amount monthly, for between 36 -72 months, regardless of what else happens in your life.


Reducing Your Auto Payment

Adjusting Your Auto Payment

Managing to a budget often requires compromises. If you find that your budget does not allow for your auto purchase plans, it is probably time to rethink your assumptions and possibly your expectations. Some options for your to consider:

  • Start with the most basic. Reduce the auto purchase price. Everything starts here. In the auto payment calculator, lower the value of the auto purchase, keeping all the other fields the same, until the monthly payment fits your budget needs.
  • That purchase price is what you can afford, without making adjustments in auto financing. Adjustments in financing, whether the term of the auto loan or interest rate, will invariably increase your total interest costs. Negotiate a better price with the auto dealership, negotiate with another dealership, change the auto model and features, shift from a new to used auto, whatever. Force a concession on the purchase price and be prepared to walk away. Tomorrow is another day.
  • Separate the purchase of the auto, from where you choose to do the financing of the auto (dealership, bank or credit union).
  • Increase your down payment to reduce your finance costs, independent of where you choose to finance the auto. This reduces your financing costs and monthly payments over the term of the auto loan. In the auto payment calculator, vary the amount of the initial deposit to see how your monthly payment is reduced.
  • For example, an auto purchase price of $20,000, 4% APR, 60 month loan, varying the auto down payment from $0 results in $372/month, a $2,000 down payment results in $335/month and a $4,000 down payment results in $292/month. If your goal is a monthly auto loan payment under $300, your maximum amount to finance is $20,000 – $4,000 = $16,000.
  • Increase the auto loan term length, at the expense of paying more interest charges. However, if the option of carrying an auto loan for more than 60 months is your best alternative to fit within your budget, you should revisit your expectations as to what you can afford in an auto purchase or consider an auto lease option.
  • The final option is to try and reduce your APR on the auto loan. This may entail the need to improve your credit score and worth a few months delay in the auto purchase until it improves.

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