Buying a car is a necessary expense in most parts of the U.S., and it can be a budget-buster if you don’t understand how much it’ll cost.

Fortunately, we have a tool to keep you from wrecking your finances when buying a car. The CarInsurance.com auto loan calculator gives you a clear picture of how much you will pay every month for that shiny set of new wheels – check it out below.

Car Loan Calculator and Estimator

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Disclaimer: Title, registration, other fees, taxes and incentives are not included in this calculation. This is a monthly auto loan payment estimate provided for informational purposes only; this is not a financial offer.
Amortization Schedule
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How to use the car loan calculator to calculate your monthly car payment

Here’s what you need to enter into the auto loan calculator:

  • Vehicle price
  • Loan term
  • Down payment amount
  • The sales tax rate for your state
  • Estimated interest rate based on your credit score

Once you get the result, click on “Amortization,” which produces a printable table that shows a monthly breakdown with payment dates and a monthly balance.

Buying a used car? Click on the “See Average Rates for Used Car” banner to see what you can expect to pay for coverage for 4,500 used car models from 2006 to 2021.

Check out our used car tool and guide on how much is insurance for a used car.

Here’s how to shop for a car

Before shopping for a car, you will need to decide whether to buy it new or used.

Many people love having a brand-new car, and knowing they are the only person who has ever owned the vehicle. But there is a big price to pay for that privilege.

New cars can be substantially more expensive than their used counterparts. In addition, the value of new cars quickly depreciates within the first few years of ownership.

By contrast, used cars cost less, and much of the depreciation already has taken place by the time you purchase the vehicle. However, used cars may be less reliable than new cars.

Once you make the tough decision between new and used, you have a better notion of where to shop. If you want a new car, expect to end up at a car dealership.

If you decide to pursue a used car, you may end up at a dealership or used car lot, or find yourself negotiating private sales directly with car owners.

Whether you buy new or used, keep in mind the following tips:

  • Research the cars that interest you. Find out what features they offer, and learn what both consumers and auto experts think of them.
  • Shop around. As with just about any purchase, comparison shopping is among the best ways to score a good deal.
  • Research your vehicle. Look at Kelley Blue Book for pricing and safety information and get a CARFAX report to make sure the car isn’t a lemon.
  • Be ready to negotiate. Those who are determined to haggle often can save, as dealers typically have wiggle room on their 10% to 20% profit margin, according to the Federal Trade Commission.
  • Go directly to the manufacturer. If your needs are simple and you don’t require all the bells and whistles that some new-car options provide, you might save money by ordering a plain version of the car directly from the manufacturer.

Check your credit report before you get an auto loan

If you plan to finance your purchase through an auto loan, your credit score will play a large role in how much you end up paying.

Lenders look at credit scores to determine how big of a risk a borrower poses. Borrowers who have high credit scores get the best loan terms. On the other hand, borrowers with poor scores are likely to pay more for their loans.

For this reason, it is crucial to look at your credit report before you apply for an auto loan. There is a decent chance your report contains an error. The federal government estimates that at least 1 in 5 people have such an error on one or more of their reports.

Correcting these errors can help boost your credit score and improve your auto loan rate. But you will never spot the mistake if you don’t look for it first.

Learn more about what is an auto insurance score and how its different from a credit score.

Compare lenders to get the best deal

When looking for an auto loan, make sure to compare rates with several lenders. That way, you will improve your odds of getting the best loan terms at the lowest rate.

For example, the Federal Trade Commission warns that getting financing from a car dealership often is not the best deal available, even if it’s convenient.

The FTC also notes that some dealers and lenders will encourage you to buy credit insurance that you can use to pay off your car loan should you die or become disabled. However, this type of coverage may not be worthwhile. And federal law does not require you to purchase this coverage, although an individual dealer might, the FTC says.

Choose your down payment and loan term

The general rule of thumb is that you should make a down payment of at least 20% when buying a new car or a minimum down payment of 10% for a used car.

One way to save money on an auto loan is to put down a bigger down payment. The larger your down payment is, the less you have to borrow, which means paying less interest over the life of the loan.

But some people struggle to come up with a large down payment. Also, devoting a chunk of your savings to a large down payment could leave you with less money for emergencies or other expenses that might arise in the future.

Another way to make your monthly payment more manageable is to stretch out the loan term. The longer period of time you have to pay back the loan, the lower the monthly payment will be.

However, a longer loan period usually means you will spend more over the life of the loan in interest payments.

The Consumer Financial Protection Bureau explains that if you have a $20,000 loan at an interest rate of 4.75% and you choose a 36-month term, your monthly payment will be $597 and you will pay $1,498 in interest.

If you stretch out the loan term to 72 months, your monthly payment will drop to $320, but you will pay $3,024 in interest over the life of the loan.

Read the fine print

Whenever you apply for an auto loan, it’s important to carefully read the fine print so you are clear about what you are getting into.

Make sure you understand the:

  • Annual percentage rate
  • Fees
  • Repayment terms

Once you sign on the dotted line, you are contractually required to live up to your end of the agreement.

Shop for the best car insurance for your new car

One of the best ways to save money on insurance is to choose a new car that is less expensive to insure.

Mike McCartin, an independent insurance agent and president of Joseph W. McCartin Insurance in Beltsville, Maryland, says buying a more conservative – safer – vehicle will likely save you more on premiums.

“When I say conservative, I mean in terms of power, in terms of price,” he says.

For example, more expensive cars are costlier to replace if they are stolen or totaled, McCartin says. For that reason, they typically have higher insurance premiums. Additionally, cars with more safety features and smaller engines are typically cheaper to insure. He says that cars that are “targeted by thieves” also can be more expensive to insure.

Whichever car you buy, make sure you compare rates with several different insurers so you find the coverage that is right for you at the best price.

Check out our experts’ recommendations on How to insure a new car?

Final thoughts: How to estimate your monthly car payment

You should fully understand your monthly car payment before it becomes your legal obligation. People who get into trouble on an auto loan often fail to grasp the terms and costs of their loan until it is too late.

Fortunately, a little time spent with our auto loan calculator can help you get the big picture regarding your car loan. That way, you will have a clear sense of what you might owe and whether you can afford it.

Resources & Methodology

Sources:

  1. Consumer Financial Protection Bureau. “Common errors people find on their credit report – and how to get them fixed.” Accessed October 2022.
  2. Consumer Financial Protection Bureau. “How do I compare auto loan offers? What should I look at besides the monthly payment?” Accessed October 2022.
  3. Experian. “Getting a Large Loan? Read the Fine Print.” Accessed October 2022.
  4. Federal Trade Commission. “Buying a New Car.” Accessed October 2022.
  5. National Highway Traffic Safety Administration. “Newer Cars Are Safer Cars.” Accessed October 2022.
  6. CARFAX. “Vehicle History Reports.” Accessed October 2022.
  7. Nationwide. “How down payments work.” Accessed October 2022.
  8. Progressive. “How much should you put down on a car?” Accessed October 2022.