Question 1

How is my monthly car payment calculated?

Accepted Answer

Monthly car payments are calculated using the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the loan amount (car price minus down payment and trade-in), r is the monthly interest rate, and n is the number of monthly payments. For example, a $30,000 loan at 6.5% APR for 60 months results in a $587/month payment.

Question 2

What is a good interest rate for a car loan?

Accepted Answer

As of 2024-2025, average new car loan rates range from 5.5% to 8.5% depending on your credit score. Excellent credit (750+) typically qualifies for 5-6%, good credit (700-749) gets 6-7.5%, fair credit (650-699) sees 8-11%, and poor credit (below 650) may face 12-18%. Credit unions often offer 0.5-1% lower rates than banks.

Question 3

Should I choose a 60-month or 72-month car loan?

Accepted Answer

A 60-month loan has higher monthly payments but costs significantly less in total interest. For example, on a $30,000 loan at 6.5%: 60 months costs $5,220 in interest vs. $6,348 for 72 months — that's $1,128 more. Longer terms also risk being "upside down" (owing more than the car is worth). Only choose 72+ months if you need the lower payment and plan to keep the car long-term.

Question 4

How much should my down payment be on a car?

Accepted Answer

Financial experts recommend 20% down on a new car and 10% on a used car. A larger down payment reduces your loan amount, monthly payment, and total interest. It also helps you avoid being "upside down" on the loan due to depreciation. If you have a trade-in, its value can count toward your down payment.

Question 5

Does paying extra on my car loan save money?

Accepted Answer

Yes! Extra payments go directly toward the principal, reducing both the total interest and the loan duration. Even an extra $50/month on a $30,000 loan at 6.5% can save you $500+ in interest and pay off the loan 6-8 months early. Check that your lender doesn't charge prepayment penalties before making extra payments.

Question 6

What is the difference between Auto Loan Calculator and True Car Cost?

Accepted Answer

The Auto Loan Calculator focuses specifically on loan financing — monthly payments, interest costs, and amortization schedules for different loan terms. The True Car Cost Calculator gives you the total cost of ownership including depreciation, insurance, fuel, maintenance, and registration fees over the life of the vehicle. Use both together for a complete picture.

Question 7

Should I get pre-approved for an auto loan?

Accepted Answer

Absolutely. Getting pre-approved from a bank or credit union before visiting dealerships gives you leverage to negotiate a better deal. You'll know your rate and budget upfront, and you can compare the dealer's financing offer against your pre-approval. Pre-approval typically involves a "hard" credit inquiry that stays on your report for 2 years, but multiple auto loan inquiries within 14-45 days count as one inquiry.

Term	Monthly	Total Interest	Total Cost
36 months(3.0yr)	$919.47	$3,101	$38,101
48 months(4.0yr)	$711.45	$4,150	$39,150
60 months(5.0yr)Selected	$586.98	$5,219	$40,219
72 months(6.0yr)	$504.30	$6,309	$41,309
84 months(7.0yr)	$445.48	$7,421	$42,421

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