Finance
See your monthly car payment and total interest based on price, down payment, rate, and term.
The amount financed is the car's price plus sales tax, minus your down payment and trade-in value. That amount is then amortized over your loan term using the standard auto loan formula, which — like a mortgage — front-loads interest slightly, though far less dramatically since auto loan terms are much shorter.
Sales tax rules vary significantly by state and sometimes by whether you have a trade-in (some states only tax the difference between the new car's price and your trade-in value). Check your local rules if you want a more precise number.
Common questions about auto loans and getting a better rate.
A longer term does lower your monthly payment, but you'll pay more total interest and stay 'underwater' (owing more than the car is worth) for longer, since cars depreciate quickly in the first few years. Many financial advisors suggest keeping auto loans to 60 months or less, both to limit total interest and to avoid being underwater if you need to sell or trade in early.
A common guideline is at least 10-20% down, which helps offset the rapid depreciation new cars experience in the first year and reduces the risk of owing more than the car's worth. A larger down payment also directly lowers your monthly payment and total interest paid, since you're financing less.
Yes, often substantially — auto loan rates can vary by several percentage points between excellent and poor credit tiers, which compounds into thousands of dollars of difference in total interest over a typical loan term. Checking your credit report and score before shopping for a loan, and shopping multiple lenders, are two of the most effective ways to secure a better rate.
Not necessarily — manufacturers often offer 0% APR deals as an alternative to a cash rebate, and sometimes the rebate saves more money overall than the interest a normal loan would have cost, especially for shorter loan terms. It's worth comparing the total cost under both options (0% financing vs. rebate + your own bank/credit union loan) rather than assuming 0% is automatically cheaper.
Dealers often mark up the interest rate they get from a lender as part of their profit on the deal, while a bank or credit union loan is typically the rate you're quoted directly. Getting pre-approved by your own bank or credit union before visiting a dealership gives you a real number to compare against — and sometimes to negotiate down — rather than relying solely on dealer financing.
