Auto Loan Calculator
Estimate Your Auto Loan Payments with Precision.
Auto Loan Calculator and Financing Options
The Auto Loan Calculator is designed primarily for U.S. car purchases, with adaptation for international users. Utilize the Monthly Payments tab to reverse-calculate the vehicle purchase price if only the monthly payment is known.
Auto Loans: Borrowing Basics
Auto loans are a common choice for vehicle purchases, featuring terms of 36, 60, 72, or 84 months in the U.S. Borrowers make monthly payments toward principal and interest. Failure to repay can result in repossession.
Dealership vs. Direct Financing
Two primary financing routes exist: direct lending and dealership financing. Direct lending involves securing a loan from a bank or credit union, while dealership financing streamlines the process through the dealer. Buyers can negotiate better terms with pre-approved direct lending.
Manufacturer Financing and Rebates
Car manufacturers often provide attractive financing through dealers. Rates like 0%, 0.9%, 1.9%, or 2.9% can be offered. Vehicle rebates may also incentivize buyers. Rebate taxation varies by state, and it's essential to check eligibility for rebates on new cars.
Associated Fees for Car Purchases
Apart from the purchase price, various fees accompany a car purchase. These fees can usually be included in the auto loan or paid upfront, though low credit scores may necessitate upfront payments. Here is a compilation of common fees related to U.S. car purchases.
Most U.S. states levy sales tax on auto purchases, with options to include it in the car price depending on the state. Sales tax exemption applies in Alaska, Delaware, Montana, New Hampshire, and Oregon.
Dealers charge this fee to process title and registration documents.
Title and Registration Fees
States collect these fees for vehicle title and registration.
Dealers may pay this fee to promote manufacturer's vehicles within their region. It's often included in the auto price.
This covers vehicle shipment from plant to dealer and usually ranges from $900 to $1,500.
Auto insurance is compulsory in the U.S. for legal driving. Loan-based purchases often require full coverage insurance, which can cost over $1,000 per year.
Note: Check 'Include All Fees in Loan' for bundled fees in the calculator. Demand explanations for any mysterious charges from dealers.
Auto Loan Strategies: Be Well-Prepared
Preparation is Key
Being well-prepared is crucial for securing a great auto loan. Determine your budget before visiting a dealership, knowing the desired vehicle type simplifies research, and sets the stage for finding the best deals. Research average rates for chosen models to facilitate effective negotiations with salespeople. Obtain multiple lender quotes and consider preapproval for better negotiation power.
Engage in negotiations with dealers armed with information. Compare lender quotes and be ready to negotiate for a better deal. Dealers may lower prices significantly through negotiation. Direct lending preapproval strengthens your position.
Credit and Approval
Credit and income primarily determine auto loan approval. Better credit scores secure lower interest rates and reduced overall car costs. Improve credit scores before seeking a car loan for better negotiation power.
Cash Back vs. Low Interest
Decide between a cash rebate or low-interest rate when offered by auto manufacturers. A rebate instantly lowers the car's price, while lower rates save on interest. Use the Cash Back vs. Low Interest Calculator for insights.
Early Payoff Benefits
Paying off an auto loan early saves on interest and shortens the loan term. Check for early payoff penalties before signing the loan contract.
Consider buying slightly used cars for substantial savings due to off-the-lot depreciation. Leasing offers a cost-effective option for those who enjoy driving new cars. Evaluate auto leases with the Auto Lease Calculator.
In some cases, public transportation, carpooling, biking, or walking might be viable alternatives to car ownership. Assess your needs before committing to a vehicle.
Benefits of Cash Purchase for a Car
Financial Freedom Purchasing a car with cash eliminates monthly payments and late fees, offering emotional relief and freedom from loan burdens.
Interest Savings Avoiding financing means zero interest charges, reducing the overall cost of owning the car. A cash payment can save thousands compared to a financed loan.
Ownership Flexibility Full ownership allows selling, modifying, and insuring the car without restrictions, providing future flexibility.
Budget Control Paying upfront sets a clear budget, preventing overbuying or stretching finances for unnecessary expenses.
Immediate Discounts Cash purchases often lead to rebates and immediate discounts, saving money upfront.
Underwater Loan Prevention By sidestepping financing, the risk of being underwater on a depreciating asset is avoided.
Considerations While cash offers advantages, financing might make sense for certain situations, such as low-interest rate opportunities or credit score improvement efforts. Each individual must evaluate the best choice for their circumstances.
Trade-In Value and Sales Tax
Trade-In Process Trading in a vehicle to a dealership involves exchanging it for credit towards a new purchase. While trade-ins may not yield significant value, selling privately for a future car purchase can be financially preferable.
Sales Tax Impact In states collecting sales tax on auto purchases, tax is based on the difference between new car and trade-in prices. For instance, a $50,000 car with a $10,000 trade-in, and an 8% tax rate would have tax of ($50,000 - $10,000) × 8% = $3,200.
Exceptions and Adjustments Some states, like California and Michigan, offer no sales tax reduction for trade-ins. This calculator adapts sales tax calculation based on the state provided.
Considerations In states without trade-in tax reduction, a private sale might make sense. For instance, a $50,000 car at 8% tax rate would have tax of $4,000, a potential incentive for private sellers in these states.
How to calculate for a car loan?
Calculate your monthly car loan payment manually by dividing the total loan and interest by the loan term. For instance, a $30,000, 60-month loan at 4% has a total interest of $3,150.
Who has the lowest auto loan rates?
Based on our research, AutoPay presents the lowest auto loan rates for purchases, with APRs as low as 2.99% for new vehicles. Other competitive rates are offered by PenFed Credit Union, Auto Approve, Consumer's Credit Union, Auto Credit Express, and iLending.