Auto Loan Calculator
Calculate your monthly or yearly auto loan payments, total loan amount, total cost and more with Auto Loan Calculator with zero cost.
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A Simple Introduction to Auto Loan and Auto Loan Calculator tool 😃
If you are a begineer and want to know about what is Auto Loan and why is it named Auto Loan and not Car Loan, then you are at the right place. In this article, let's discuss about Auto Loan and how to use an Auto Loan Calculator. Also we will see an example of Auto Loan Calculator and some FAQs related to the Auto Loan. Let's get started with the article 🚗.
What is an Auto Loan? 🤷♀️
An Auto Loan is a simple financial concept. Like any other loan, Auto Loan is a type of financing that allows you to purchase a vehicle by borrowing money from a lender (mostly bank, credit union or any other dealer). Instead of paying for your new car upfront in cash, the loan allows you to make monthly payments over a period of time, with interest charged on the total amount borrowed by you by the financial Institution. Like any other loans, Auto Loans also have a fixed term (duration) and interest rate. The interest rate can be fixed or variable, and the loan term can be short or long, depending on the lender and your credit score. The monthly amount that you need to pay is determined by various other factors like the car price, loan term, interest rate, down payment and more.
Well, what is an interest now? The interest is nothing but the cost of borrowing money. For example, if you borrow a book from your friend and you have to pay him some money for borrowing the book, then that money is called as interest. Similarly, in Auto Loan, the interest is the cost of borrowing money from the lender.
How to Use the Auto Loan Calculator? 🤔
Well, if you are aware of the Auto Loan and its concept, then you can follow the below steps to use the Auto Loan Calculator tool:
Calculation Mode consists of two options: Total Price and Monthly Payment. Select the mode based on your requirement.
Enter the price of the vehicle before any incentives or trade-in value. This input is in form of number.
Enter the loan term in months and the annual interest rate of the loan. The loan term is the duration of the loan and the interest rate is the cost of borrowing money.
Enter the respective cash incentives as well as the down payment you made to the dealer or lender.
If you have any old vehicle, then enter the trade-in value and the amount you still owe on your old vehicle.
Enter the sales tax rate and the amount of money that you have to pay to the government for the title, registration, and other fees.
Tick the checkbox if you want to include all the fees in the loan amount. If you include all the fees in the loan amount, you will pay interest on the fees as well.
Click on the Calculate Loan button to know your monthly or yearly auto loan payments, total loan amount, total cost and more.
Don't worry, if you are not aware of the above terms. Read the article further to know in detail about each term of the Auto Loan Calculator.
Example of Input ✒️

Understanding Terms of Auto Loan 📚
Let's first understand, how does Auto Loan Calculator works? When you take out an Auto Loan, the lender (like bank) pays for the vehicle on your behalf, and in return, you agree to repay the loan amount (the amount that lender pays on your behalf - also called principal amount) along with the interest over an agreed-upon period. Typically, Auto Loans ranges from 24 to 72 months. The longer the loan term, the lower the monthly payments, but you'll pay more interest in the long run (meaning you will pay more money to the lender than the actual loan amount). The lender holds the vehicle (like car) title as collateral until you pay off the loan in full. If you miss the payments, the lender has the right to repossess your bought vehicle. So, this was about the Auto Loan.
Now, let's understand the terms of the Auto Loan Calculator in detail:
1. Auto Price 💰:
Auto Price means the Price of the vehicle before any Incentives or Trade-In value. It is the original price of the vehicle that is set by the dealer or manufacturer.
2. Loan Term 📅:
The length of time (in months) over which you have to repay the loan. Common terms are 36, 48, 60, or 72 months. A longer loan term means smaller monthly payments but more interest over time. In simple terms, the loan term is the term which you take to repay the loan amount to the lender.
3. Interest Rate 📈:
This is the Annual Percentage Rate (APR) that the lender charges you for borrowing the money. A 5% interest rate means you'll pay 5% of the loan amount each year as interest. This interest rate can be fixed or variable. A fixed interest rate means the interest rate will remain the same throughout the loan term. A variable interest rate means the interest rate can change over time basically based on the market conditions.
4. Cash Incentives 💸:
Cash Incentives are rebates or discounts offered by the dealer to reduce the original vehicle price (Auto Price). If you have a $1,500 rebate, the vehicle price (Auto Price) will be reduced accordingly. You don't have to include this amount in the Auto Price, it will be calculated automatically.
5. Down Payment 💵:
Down Payment means the amount of money that you already paid to the dealer or lender to reduce the loan amount. This also means that the amount you paid to the dealer in order to confirm the purchase of the vehicle. Mostly, it is advisable to pay a moderate amount as down payment to reduce the loan amount and the interest rate. Paying larger down payment will reduce the loan amount and the interest rate, but it will increase the upfront payment. For example, if the car costs $40,000 and you make a $10,000 down payment, you'll need to finance $30,000.
6. Trade-In Value 🪙:
Trade-In Value means the amount of money that the dealer or lender is offering for your old vehicle. If you trade in your current vehicle, the dealer will apply its value toward your original vehicle price (Auto Price). For example, if your old car is worth $2,000, this amount is deducted from the price of the new vehicle. This amount is decided by the dealer or lender based on the condition of your old vehicle. Trade-In Value is also called as Trade-In Equity. If you owe more than the trade-in value, you have negative equity. If you have a negative equity, then you have to pay the difference amount to the dealer or lender.
7. Amount Owed on Trade In 🤑:
If you owe money on your trade-in vehicle, the amount you owe is subtracted from the trade-in value. For instance, if you owe $3,000 on your current car and it's worth $5000 , you have $2,000 in trade-in equity.
8. Sales Tax 📉:
Sales Tax is a percentage of your new vehicle price you must pay as tax, depending on your location. For example, if your sales tax rate is 7% and your car costs $30,000, you'll pay $2,100 in sales tax. You can check the sales tax rate for your location on the internet or ask the dealer.
9. Titles and Fees 💳:
These are additional costs for transferring ownership of the car, registering it, and paying administrative fees.
10. Monthly Payment 💰:
The amount you'll pay each month based on the loan amount, interest rate, and loan term. You can calculate this amount by using our Loan Calculator tool. Click here to use Loan Calculator tool.
Calculating Your Auto Loan 🧮
Let's say you're buying a car for Auto Price: $40,000. You plan to make a $5,000 down payment and trade in a car worth $3,000. The interest rate on the loan is 4%, and theloan term is 60 months. The sales tax is 6%, and the title and fees amount to $1,500.
Here's how you would calculate the loan amount:
Loan Amount = (Auto Price) - (Down Payment) - (Trade-In Value) + (Sales Tax) + (Title and Fees)
👉 Loan Amount = $40,000 - $5,000 - $3,000 + $2,400 + $1,500 = $35,900
Monthly Payment = (Loan Amount * Monthly Rate * (1 + Monthly Rate)^Loan Term) / ((1 + Monthly Rate)^Loan Term - 1)
👉 Monthly Payment = ($35,900 * 0.00333 * (1 + 0.00333)^60) / ((1 + 0.00333)^60 - 1) = $650.88
Total of Loan Payments = Monthly Payment * Loan Term
👉 Total of Loan Payments = $650.88 * 60 = $39,052.80
Total Loan Interest = Total of Loan Payments - Loan Amount
👉 Total Loan Interest = $39,052.80 - $35,900 = $3,152.80
Total Cost = Total of Loan Payments + Down Payment + Trade-In Value
👉 Total Cost = $39,052.80 + $5,000 + $3,000 = $47,052.80
So, the total cost of the car would be $47,052.80. This is how you can calculate your Auto Loan without using the Auto Loan Calculator tool. But it is advisable to use the Auto Loan Calculator tool to get the accurate results.
Frequently Asked Questions (FAQs)
Q1: What is an Auto Loan?
An Auto Loan is a type of financing that allows you to purchase a vehicle by borrowing money from a lender, which you repay over time with interest.
Q2: Why is it called an Auto Loan and not a Car Loan?
Auto Loan refers to loans for purchasing any type of vehicle, not just cars. It can include trucks, motorcycles, or other motor vehicles.
Q3: How does an Auto Loan Calculator work?
The Auto Loan Calculator takes inputs like the loan amount, interest rate, loan term, and fees to calculate your monthly payments, total interest, and overall loan cost.
Q4: What is the Loan Term in an Auto Loan Calculator?
The loan term is the length of time over which you will repay the loan. It is typically measured in months, such as 36, 48, 60, or 72 months.
Q5: What factors affect my Auto Loan monthly payment?
Your monthly payment is affected by the loan amount, interest rate, loan term, down payment, trade-in value, and additional fees or taxes.
Q6: What is the difference between a down payment and a trade-in value?
A down payment is the money you pay upfront when purchasing a vehicle, while a trade-in value is the amount you receive for trading in your old vehicle.
Q7: Can I include fees and taxes in my Auto Loan?
Yes, many lenders allow you to include sales tax, registration, and title fees in the loan amount, though this will increase the amount of interest you pay.
Q8: What is an interest rate in an Auto Loan?
The interest rate is the cost of borrowing money from a lender. It is expressed as a percentage and can be either fixed or variable over the loan term.
Q9: Can I pay off my Auto Loan early?
Yes, you can pay off your Auto Loan early, but some lenders may charge a prepayment penalty. Check with your lender before making extra payments.
Q10: How do I calculate the total cost of an Auto Loan?
The total cost of an Auto Loan is the sum of your monthly payments, down payment, trade-in value, fees, and taxes. The Auto Loan Calculator will give you this figure automatically.
Q11: What happens if I miss an Auto Loan payment?
Missing an Auto Loan payment can result in late fees, damage to your credit score, and possible vehicle repossession if payments are continuously missed.
Q12: Is the interest rate fixed or variable for Auto Loans?
Most Auto Loans offer fixed interest rates, but some lenders may offer variable interest rates that fluctuate based on market conditions.
Q13: How does my credit score affect my Auto Loan?
A higher credit score typically allows you to qualify for lower interest rates, while a lower credit score may lead to higher rates and stricter loan terms.
Q14: What is the typical range for Auto Loan terms?
Auto Loan terms typically range from 24 months to 72 months. A longer loan term will lower your monthly payment but increase the overall interest paid.
Q15: Can I use an Auto Loan for a used car?
Yes, Auto Loans can be used for both new and used cars. However, interest rates for used cars may be slightly higher compared to new cars.