What is a good interest rate for an auto loan?

In 2026, average auto loan rates by credit score: excellent (750+): 5–6%; good (700–749): 6–8%; fair (650–699): 9–13%; poor (<650): 14–20%. New cars average lower rates than used. Credit unions often beat dealer financing by 1–3%.

How much should I put down on a car?

Aim for at least 20% down on a new car or 10% on used. A larger down payment reduces monthly payments, total interest, and the risk of going "underwater" (owing more than the car's value). For a $35,000 car, 20% down = $7,000 reduces a 60-month 7% loan by ~$100/mo.

What loan term should I choose for a car?

48–60 months is the sweet spot. Shorter terms mean less interest: on $28k at 7%, 48mo = $669/mo (~$4,150 interest) vs 72mo = $477/mo (~$6,370 interest) — over $2,200 more for the longer term. Avoid 72–84 month loans unless the rate is very low.

What is a trade-in value?

A trade-in is selling your current vehicle to the dealer and applying the value toward the new purchase. If your trade-in is worth $8,000 and you owe $3,000 on it, the net trade-in equity is $5,000. This reduces the amount you need to finance.

What fees are typically added to a car loan?

Common fees: sales tax (0–10% depending on state), title and registration ($100–$400), documentation fee ($100–$500), destination fee ($900–$1,500 for new cars). Rolling these into the loan is common but increases total interest paid.

What credit score do I need for the best auto loan rate?

To qualify for the lowest advertised auto loan rates (typically 5–6% on new cars in 2026), you generally need a credit score of 750 or higher. Scores of 700–749 qualify for good rates (6–8%). Scores of 650–699 typically result in fair rates (9–13%). Scores below 650 may see rates of 14–20%+ or require a cosigner. Improving your credit score even by 30–50 points before applying can save thousands in interest on a 60-month loan.

Should I finance through a dealer or my bank?

Get pre-approved by your bank or credit union before visiting a dealer. Dealer financing can be convenient and sometimes offers 0% APR promotions for qualified buyers — but dealer finance managers often profit from the rate spread between what the lender charges and what you agree to pay. Coming in pre-approved gives you a rate baseline and negotiating leverage. Credit unions consistently offer lower rates than banks or dealer financing for most credit profiles.

How does loan term length affect the total cost of a car?

Longer loan terms dramatically increase total interest paid. On a $28,000 loan at 7%: a 48-month term costs about $4,150 in interest total; a 60-month term costs about $5,240; a 72-month term costs about $6,370; and an 84-month term costs about $7,500. Beyond interest, longer-term loans increase the risk of going "underwater" — owing more than the car is worth — since vehicles depreciate faster than long-term loans pay down principal.

Auto Loan Calculator — Monthly Payment & Total Cost

Calculates monthly car payment, total interest, and loan cost — or finds maximum loan amount for a target monthly payment.

How to Use This Auto Loan Calculator

The auto loan calculator on this page estimates your monthly car payment, total interest, and loan cost for any vehicle purchase. Switch between two modes using the toggle at the top: in Monthly Payment mode, enter the vehicle price, down payment, trade-in value, interest rate, and loan term; in Loan Amount mode, enter your target monthly payment, rate, and term to find the maximum loan you can afford. Use the Share button to save and share your scenario. For other debt calculations, our loan calculator handles any loan type with flexible inputs.

How Car Loan Payments Are Calculated

Auto loan payments use the standard amortization formula:

Monthly Payment = Loan Amount × r(1+r)^n / ((1+r)^n − 1)

Where r = annual rate ÷ 12 (monthly rate) and n = number of months. Your loan amount is the vehicle price minus your down payment and trade-in value. For example, a $30,000 loan at 7% over 60 months: r = 0.07/12 = 0.005833, n = 60. Monthly payment = $594.04. Total interest = $594.04 × 60 − $30,000 = $5,642.

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New vs. Used Car Loan Rates

New cars consistently qualify for lower interest rates than used vehicles. In 2026, the average new car loan rate is roughly 6–7% for good credit, while used car rates run 2–3 percentage points higher — often 8–10%. Lenders charge more for used cars because they carry higher default risk and depreciate faster.

New car (750+ credit): 5.0–6.5% typical APR
Used car (750+ credit): 7.0–9.0% typical APR
Certified Pre-Owned: Often qualifies for new-car rates through the manufacturer
Credit union financing: Typically 1–3% below dealer rates for the same credit profile

Always get pre-approved by your bank or credit union before visiting the dealer — it gives you a rate benchmark and negotiating leverage.

How Loan Term Affects Your Total Cost

Longer loan terms lower the monthly payment but dramatically increase total interest paid. Here is a comparison on a $28,000 loan at 7%:

36 months: $864/mo — total interest $3,107
48 months: $669/mo — total interest $4,112
60 months: $554/mo — total interest $5,242
72 months: $477/mo — total interest $6,367
84 months: $421/mo — total interest $7,366

The 48–60 month range balances manageable payments with reasonable interest costs. Avoid 72–84 month loans unless the rate is unusually low — the extra interest often negates any monthly savings.

How Much to Put Down on a Car

Financial experts recommend putting at least 20% down on a new car and 10% on used. Here is why the down payment matters beyond just reducing your loan amount:

Prevents being underwater: New cars lose 10–20% of value the moment they leave the lot. A 20% down payment keeps you from owing more than the car is worth within the first few years.
Lowers monthly payments: On a $35,000 car at 7% / 60 months, going from 10% down ($3,500) to 20% down ($7,000) reduces the monthly payment by roughly $66 and saves over $400 in interest.
May improve your rate: Some lenders offer better rates with higher LTV (loan-to-value) ratios.

If you cannot put 20% down, consider a shorter loan term or a less expensive vehicle to avoid the underwater trap.

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Understanding Trade-In Value

A trade-in is when you sell your current vehicle directly to the dealer and apply the value as a credit toward your new purchase. The trade-in reduces the amount you need to finance — effectively acting as an additional down payment.

If your car is worth $8,000 and you still owe $3,000 on it, your net trade-in equity is $5,000. Enter that $5,000 in the Trade-in Value field. If you owe more than the car is worth (negative equity), the deficit is typically rolled into the new loan — increasing your financed amount.

Research your vehicle's value using multiple sources before visiting the dealer. Dealer trade-in offers typically run 10–20% below private-sale values. If the trade-in offer seems low, selling privately may net you significantly more — which you can then apply as a cash down payment.

Strategies to Get the Best Auto Loan Rate

Improve your credit score first: Even moving from 680 to 720 can reduce your rate by 2–3%, saving thousands over a 60-month loan.
Get pre-approved before the dealer: Banks and credit unions often beat dealer financing. Bring a pre-approval letter so the dealer must compete.
Shop multiple lenders: Rate-check with 3–5 lenders within a 14-day window — multiple hard inquiries for auto loans within that period count as a single inquiry on your credit report.
Choose a shorter term: Shorter terms carry lower rates. A 36-month loan typically costs 0.5–1% less than a 72-month loan from the same lender.
Negotiate the vehicle price separately: Dealer finance officers profit from the rate spread. Negotiate the vehicle price first, then discuss financing — or bring outside financing to keep them separate.

If you are managing multiple debts alongside your car loan, the debt snowball calculator can help you build a payoff plan that tackles all your debts systematically.

Financial Disclaimer

This calculator is for planning and educational purposes only and is not financial advice. Results are estimates based on the inputs provided. Actual loan rates, terms, fees, and eligibility vary by lender, credit score, and vehicle type. Consult your lender and a qualified financial advisor before making financing decisions.

Auto Loan Calculator