A car loan costs more than the price of the car, because you also pay interest.
For example, on a $38,400 loan at 6.35% APR for 60 months, the payment is about $749 a month and total interest is about $6,519.
AdvertisementUse the free calculator below to see your own payment, total interest and total cost.
You can add sales tax, fees, a trade-in and an extra monthly payment to see how much interest you could save.
Free Car Loan Interest Calculator
Enter your numbers
The vehicle price before tax, fees, trade-in and down payment.
Cash you pay up front, as a dollar amount or a percent of the price. Type in either box and the other updates. A larger down payment means a smaller loan and less interest.
Enter dollars or a percent of the price. Change either one and the other updates.
The value a dealer gives for your old car. It lowers the loan and, in most states, the sales tax. Leave 0 if none.
Your state and local sales tax percent. It is applied to the price minus any trade-in here, but some states tax differently.
Example only. Enter your state’s rate
Title, registration and dealer fees you roll into the loan, in dollars. Leave 0 if you pay them in cash.
The yearly interest rate (APR) on the loan. Use the rate in your lender’s quote if you have one.
Experian’s average new-car APR, Q2 2026
How many months you will take to repay. Longer terms lower the payment but cost more interest.
Extra dollars you add to each monthly payment. This pays the loan off sooner and saves interest. Leave 0 if none.
Optional. See how much interest you save
Your inputs
| Vehicle price | $40,000 |
| Down payment | $4,000 (10%) |
| Trade-in value | $0 |
| Sales tax | 6% |
| Fees rolled into the loan | $0 |
| Interest rate (APR) | 6.35% |
| Loan term | 60 months |
| Extra payment | $0 a month |
Estimated monthly payment
$749
Loan of $38,400 for 60 months at 6.35% APR
| Amount financed | $38,400 |
| Total interest | $6,519 |
| Total of all payments | $44,919 |
| With your extra payment: payoff time | Add an extra payment to see |
| Interest saved | — |
This is an estimate, not a loan offer. Your lender’s numbers will differ.
To save your estimate: press Ctrl+P (Windows) or Cmd+P (Mac) and choose Save as PDF. Only the results print.
Car Loan Checklist
Tick each item as you finish. You are ready to talk with lenders when the counter reaches 10.
How Car Loan Interest Is Calculated
Most car loans charge interest on the balance you still owe. Check your contract to confirm the loan type. Each month, your lender takes your APR, divides it by 12 and applies it to the current balance. The rest of your payment reduces the balance.
- Find the monthly rate. A 6% APR is 0.5% a month.
- Multiply by the balance. On a $30,000 balance, one month of interest is $150.
- Subtract from the payment. If your payment is $580, about $430 reduces the balance.
- Repeat. As the balance falls, the interest part shrinks and more of each payment goes to principal.
That is why the first payments are mostly interest, and why extra payments early in the loan save the most.
Average Car Loan Rates and Amounts
Experian’s Q2 2026 automotive finance data shows how new and used car loans compare:
| Q2 2026 (Experian) | New cars | Used cars |
|---|---|---|
| Average loan amount | $43,610 | $27,852 |
| Average APR | 6.35% | 11.19% |
| Average loan term | 69.5 months | 67.9 months |
The Federal Reserve’s G.19 consumer credit release reported an average 7.14% finance rate on 60-month new-car loans at commercial banks for Q2 2026 (preliminary). The two measures cover different lenders and borrowers, so use them as a range, not a promise. Your own rate depends on your credit, down payment and lender.
How Loan Term Changes Your Interest
A longer loan lowers the monthly payment but costs more in total. Here is a $30,000 loan at 6.35% APR:
| Loan term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 36 months (3 years) | $917 | $3,027 | $33,027 |
| 48 months (4 years) | $709 | $4,050 | $34,050 |
| 60 months (5 years) | $585 | $5,093 | $35,093 |
| 72 months (6 years) | $502 | $6,155 | $36,155 |
| 84 months (7 years) | $443 | $7,238 | $37,238 |
The CFPB shows the same effect with a $20,000 loan at 4.75%:
| $20,000 at 4.75% | Monthly payment | Total interest |
|---|---|---|
| 36 months | $597 | $1,498 |
| 72 months | $320 | $3,024 |
The CFPB also notes that some experts suggest keeping auto loans to five years or less, since longer loans make it more likely you will owe more than the vehicle is worth.
Ways to Pay Less Interest
- Choose a shorter term. The payment is higher, but total interest drops a lot.
- Put more down. You borrow less, so you pay interest on less.
- Improve your credit first. Check your credit report and fix errors before you apply.
- Compare lenders. Get quotes from a bank, a credit union and the dealer on the same day.
- Add extra payments. Even a small amount each month shortens the loan. Make sure it goes to principal.
- Refinance if rates fall. A lower rate later can reduce your interest, so compare fees first.
- Skip rolling in old debt. Adding a balance from a previous loan raises the amount financed.
Mistakes to Avoid
- Looking only at the monthly payment. The CFPB says to compare the total cost as well.
- Choosing the longest term. It feels cheaper each month and costs more overall.
- Ignoring fees. Add title, registration and dealer fees to your math.
- Skipping insurance and fuel. These are part of your real monthly car cost.
- Signing before you read. Check the APR, term and any prepayment rules.
Frequently Asked Questions
How do I calculate interest on a car loan?
Divide your APR by 12 to get the monthly rate, multiply it by your current balance to find that month’s interest, and subtract it from your payment to see how much reduces the balance. The calculator above runs this for every month and totals the interest.
How much interest will I pay on a car loan?
It depends on the amount, rate and term. On the calculator’s default $38,400 loan at 6.35% for 60 months, total interest is about $6,519. Change the numbers to see your own total.
What is a good interest rate for a car loan?
Experian’s Q2 2026 data shows an average APR of 6.35% for new cars and 11.19% for used cars. Your rate depends mostly on your credit score, the loan term, the lender and whether the car is new or used, so compare several offers.
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the money. APR is a broader yearly cost that can include certain loan fees, so it is the better number for comparing offers. Use the APR in the calculator.
Is a longer car loan worse?
A longer term lowers the monthly payment but increases total interest. The CFPB’s example of a $20,000 loan at 4.75% shows about $597 a month for 36 months versus about $320 for 72 months, with more than double the interest on the longer loan.
Does a bigger down payment lower interest?
Yes. It reduces the amount you borrow, so you pay interest on less. It can also help you avoid owing more than the car is worth early in the loan.
Can I pay off a car loan early?
Often yes, and extra payments can save interest on a simple interest loan. Check your contract for prepayment penalties, and make sure extra money goes toward principal. Use the extra payment box in the calculator to see the savings.
Should I get preapproved before going to a dealer?
It is a smart step. A preapproval from a bank or credit union gives you a rate to compare against the dealer’s offer. The CFPB advises comparing the APR, loan amount, loan length and monthly payment across offers.
Does sales tax get added to the loan?
In many cases you can roll sales tax and fees into the loan, but that raises the amount financed and the interest you pay. The calculator includes a sales tax box so you can see the effect. Tax rules differ by state.
Is this calculator a loan offer?
No. It gives an estimate from the numbers you enter. Your lender’s loan documents show the actual terms. This page offers general information, not financial advice.
Conclusion
The cheapest car loan is the one with the lowest total cost, not only the lowest payment. Enter your numbers in the calculator, test a shorter term and an extra payment, and compare written offers from several lenders.
Related Reading
Sources: Experian, Average Car Payment in 2026; Federal Reserve, Consumer Credit G.19; CFPB, How do I compare auto loan offers? Estimates only, not financial advice.