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Auto Loan Calculator

Our auto loan calculator will help you nail down your monthly payments before you put your money down. But before we jump into our car loan guide, you should know that finance experts encourage buyers to keep their payment below twenty percent of their monthly net income. That is, twenty percent after taxes.

Using Our Auto Loan Calculator

Whether you’re looking to buy a new or used car there are a few simple rules to keep in mind.

Below we cover elements of an auto loan like vehicle price, down payment, trade-in value, taxes and interest rate. Each of these can greatly affect the affordability of a new car. Feel free to use our auto loan calculator to play around with the numbers until you find one that works within your budget.

Vehicle Price and Loan Amount

Even though the economy is still slow to recover, new research shows that average new car prices are at an all-time high. Compared to last year average car prices have gone up almost $2,000. This takes the average car price over $30,000.

While car prices are on the rise, this doesn’t mean you can’t get a great deal. Dealers are motivated to sell cars by negotiating, offering rebates or improving the sale terms.

Don’t forget that everything is negotiable.


Start looking at car prices online using price comparison tools and other resources. This should provide a great starting point to decide what type of car is affordable. Put a variety of vehicle prices into our auto loan calculator to determine your ideal monthly payment.

Down Payment

Unlike home loans, most auto loans do not require a down payment. Although it’s not required, a down payment will greatly reduce your monthly payments and save you serious money in the long run. Today, most buyers tend to put down 10 percent when money is tight, while others put down 20 percent or more.

Think of it this way, the more you put down, the more car you can afford. If you put down 20 percent could you afford to upgrade to the next level of car and still stay within your budget? Adjust your loan amount by 20 percent and see how it changes your monthly payments in our auto loan calculator.

Trade-in Value

If you can’t come up with a large down payment consider trading in your current vehicle to lower your total loan obligation. Trade-in values on cars will range greatly depending on the condition, miles and even the dealers current inventory. To get a general idea of what your car is worth try using a service like Kelley Blue Book. This is the industry standard for used car values.

Trade-in values are usually much lower than if you sold your car yourself. If you are savvy with classified ads or websites like Craigslist, you might get a higher price for your used car. On the other hand, it does take extra effort, time and patience. Selling your car instead of trading it in could help you make a few extra bucks and you could see the results in our auto loan calculator.

Sales Tax

Depending on where you live sales tax will greatly vary. That being said, when setting your auto payment budget, it’s a good idea to know what you’re getting yourself into. Start by calling a local car dealership to find out what the current auto sales tax rate is.

On the other hand, if you’re trying to use our auto loan calculator to estimate your monthly payments, here’s a general guide. The average sales tax on cars ranges between 4 and 6 percent depending on where you live.

A conservative buyer should add six percent to the car sale price to cover any taxes you may be forced to pay.

Interest Rate

One reason car prices are on the rise even in a slow economy may have to do with low interest rates. In general interest rates have stayed low to keep the economy moving forward. On the other hand, banks are still not lending like they were for the economy tanked.

Using our auto loan calculator you can see how quickly a slight change in interest rates can affect your monthly payment. Right now rates are low, meaning you may be able to afford a more expensive car than you expected.

If you are unable to qualify for a traditional auto loan, you may consider peer to peer lending for an unsecured personal loan. One advantage of this new type of financing is that it completely bypasses the bank. Borrowers can get a loan from individual investors and there is no down payment required. The best part is that the entire process can be completed online from the comfort of your home.

Credit Score

As we pointed out, changing interest rates in our auto loan calculator can greatly affect your monthly payment. So, if you have bad credit you may be curious if you can still get approved for a car loan in our economy.

Here’s the good news: you may qualify for an auto loan without a problem. And the bad news is that you will have to pay a higher interest rate.

While this is not a deal breaker, it might change your car budget.

Bad credit auto loans typically have interest rates as high as 19.99% and sometimes up to 35% depending on your credit risk. Keep this in mind before applying for a bad credit car loan.

Loan Term

Car loans range from 3 to 5 years. The longer the loan term, the lower the monthly payments. Although a 5 year loan will have lower payments, the interest charges will be higher in the long run. On the other hand, a 3 year loan will have higher monthly payments but lower interest charges.

We covered a few of the basics on how to use our auto loan calculator to create your monthly budget. If you have any comments or questions feel free to ask our community. Also if you have a success story when buying your next car please reach out to us.

Good luck with your next car purchase!