How to Use the Auto Loan Payment Calculator

Getting started with the auto loan payment calculator takes just three simple steps.

1. Enter the Loan Amount

Use the slider to enter the loan amount you intend to borrow. Alternatively, you can type the amount into the field provided. The number can be as low as $5,000 or as high as $100,000.

2. Enter the Loan Term

Enter the loan term, or repayment duration, in years. You can use the slider to make this entry or type it into the text field. Available loan terms are usually between one and 10 years.

Some loan terms are expressed in months. If this is the case with your loan, divide its repayment term by 12 to calculate the number of term years. For example, if you start with a 72-month term and divide it by 12, you arrive at a 6-year loan term.

3. Enter the Interest Rate

Input the car loan interest rate into the “interest rate” text field.

As you make changes to each loan detail field, the auto loan payment calculator will dynamically update your estimated monthly payment information on the right. You’ll see insightful breakdowns, like the monthly payment amount, how much of each payment is applied to the loan principal vs. interest, and the total interest amount you would pay over the loan term.

Fixed vs Variable Interest Rate Car Loans

Auto loans typically come with fixed interest rates, but it is possible to get one with a variable interest rate. Here’s a quick rundown of fixed vs. variable auto loan rates.

With a fixed-rate auto loan, you agree to a specific interest rate when you sign the loan, and that rate never changes throughout the term of the loan. That means that you generally will repay exactly the same amount to your lender every month for the life of the loan, which can simplify budgeting. However, if the prevailing auto loan interest rates decrease after you get your loan, your interest rate will not reflect that drop unless you’re able to refinance to a lower rate.

With a variable-rate car loan, your interest rate can fluctuate throughout your loan term. Typically, your rate will be tied to a benchmark, such as the prime interest rate, and can rise and fall as that benchmark does. (In some cases, there may be a cap on how much your interest rate can rise.) Variable rates can mean that you don’t know exactly how much you’ll need to repay on your loan from month to month. However, they do potentially allow you to pay less in interest if the benchmark used to calculate your rate drops.

Benefits of Using an Auto Loan Payment Calculator

Using an auto loan payment calculator empowers you to make informed decisions before financing your next vehicle. It can help you:

•  Budget your monthly finances by offering solid estimates.

•  Compare auto loan financing options and the different auto loan terms that may be available.

•  Visualize how different loan terms might impact your monthly payment.

•  Understand how much of each payment goes toward the principal balance.

•  See how much you’re paying in total interest charges.

How to Use the Auto Loan Payment Calculator to Compare Scenarios

One practical way to use the auto loan payment calculator is to adjust each variable — loan amount, loan term, and interest rate — to help guide you toward your ideal loan option.

Scenario 1. Say that you check your budget, use a money tracker app, and determine that you can spend $500 a month on a car payment. You’re interested in a $50,000 car and can make a down payment of $10,000.

In this case, the loan amount you’d need to finance is $40,000. Assuming a five-year term at 6.00%, your estimated payment is $773.32. This estimated monthly payment is significantly higher than the amount you budgeted, so this loan isn’t financially feasible in this situation.

Scenario 2. To get closer to your preferred monthly payment budget, you consider buying a more affordable car and extending your loan term. The next car you look at requires a loan amount of $30,000 (after your $10,000 down payment), and you choose a 7-year term at 6.00%. Now, your estimated monthly auto payment is $438.25 — much more in line with your budget.

By using the auto loan payment calculator in this way, you can find which particular vehicle and loan suits you best.

Estimating Taxes and Fees in Your Calculation

When you take out an auto loan, you’ll need to consider sales tax and registration, title, and any dealership fees in your final costs. You can often pay these fees upfront when you purchase the car, or you can have them rolled into your monthly payments.

To calculate sales tax on your auto purchase, you’ll need to find the combined sales tax rate where you live and multiply it by the price of the car. The combined sales tax rate includes not only state sales tax, but also any local sales tax that may apply. Bear in mind that some states – New Hampshire, Oregon, Montana, Alaska, and Delaware – do not levy sales tax, but that you may still need to pay local tax.

Registration and title fees may be due to the state, and you can check these costs with your Department of Motor Vehicles (DMV). To find out what other fees your dealership may charge, ask your dealer for an itemized, written rundown of the “out-the-door” price of your car.

Strategies for Lowering Your Monthly Payment

There are a number of ways you may be able to reduce your monthly auto loan payments.

When you’re contemplating your purchase, using an auto loan calculator can demonstrate that extending your loan term can help lower monthly payments, though it generally means you pay more in total interest. (The average car loan length for a new vehicle is about 5.75 years.)

The size of your down payment can also affect how much your monthly bill will be. A larger down payment generally results in smaller monthly charges.

If you’ve already bought your car but find that the monthly payments are too steep, you may be able to refinance your auto loan to get one with a lower interest rate or longer term, either of which can help lower payments. If you’re facing financial hardship you may be able to renegotiate your loan terms with your lender to make monthly payments more affordable.

Paying Off Your Car Loan Early

If you pay off your auto loan early – before the end of the loan term – you can save money on interest and on the total cost of your loan. That can be appealing, as long as you have the extra cash on hand.

However, it’s important to check first with your lender to make sure that your loan contract doesn’t include a prepayment penalty clause, which gives the lender the power to charge a fee if you make early or extra payments. If there is a prepayment penalty, you may want to weigh your potential interest savings against the penalty to evaluate what course of action makes the most sense for you.

When to Refinance a Car

When should you refinance your car loan? There are a number of situations in which it may make sense. Here are some of the most common.

•  You can get a better interest rate. If interest rates drop, for instance, you may be about to refinance to a lower-rate loan, which could save you money on your monthly payments and your total interest costs.

•  You need to lower your monthly payments. Refinancing could let you extend your loan term and/or lower your interest rate, both of which could result in lower payments.

•  You want to take a loan against your equity in the car. If you have equity in your car, you may be able to refinance and borrow against that equity to acquire some cash as well.

Understanding Auto Loan Amortization

As you’re looking at financing for your car purchase, you may come across the term car loan amortization. Just like a mortgage, an auto loan is typically structured so that each payment you make is applied to a fraction of your principal and a fraction of your interest charges. As you pay down the loan, the percentage of your payment that goes to each one shifts. When you make your first payment, most of it is applied to interest, but as you continue to pay off the loan, more and more of each payment goes toward principal. Your monthly statement often shows the amortization breakdown of that payment.

The Takeaway

Purchasing a car is a significant financial decision for most people, and getting a loan that works for you is important. This online auto loan calculator can help inform your search for financing that aligns with your budget and long-term financial goals.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

With SoFi’s marketplace, you can quickly shop and explore options to refinance your vehicle.

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