Auto Loan Calculator

An auto loan is a straightforward amortising loan, but two features of car buying distort the arithmetic in ways a generic loan calculator will not warn you about.

The first is depreciation. A new vehicle loses value fastest in its earliest years, typically faster than a long loan repays principal. That produces negative equity — owing more than the car is worth — which matters if the vehicle is written off or you need to sell. The longer the term and the smaller the down payment, the deeper and longer that gap runs. Gap insurance exists precisely because this situation is common.

The second is that long terms are marketed as affordability. Extending a loan to six or seven years lowers the monthly payment and raises total interest, while keeping you in negative equity for much of the term. Dealers frequently negotiate around the monthly payment for this reason — it is the number that can be made to look good while the total cost rises. Negotiate the vehicle price, the trade-in value, and the financing as three separate conversations, and compare offers on total cost.

Rolling negative equity from an old loan into a new one compounds the problem: the new loan starts underwater before the new car has depreciated at all.

Also account for total cost of ownership rather than the payment alone. Insurance, fuel or charging, maintenance, registration, and tax vary substantially between vehicles, and the difference can exceed the difference in monthly payment between two cars. Securing financing pre-approval from a bank or credit union before visiting a dealer gives you a rate to compare against rather than accepting whatever is offered. Everything runs in your browser — no login, no upload, and no figure you enter leaves the page.