Car Loan Calculator

How this is calculated

The amount financed is the price minus your deposit. The monthly payment is the standard amortisation formula: amount x monthly rate, divided by (1 minus (1 + monthly rate) to the power of minus the number of months). The monthly rate is the APR divided by 1200 - by 100 to turn the percentage into a decimal, then by 12 for the months. At an APR of exactly zero that formula divides by zero, so the calculator switches to plain division - the amount spread evenly across the payments. The total cost line is the one worth reading. It is the price of the car plus every dollar of interest, and it is the honest answer to what the thing costs. A dealer will almost always negotiate on the monthly payment instead, because the monthly payment can be lowered without making anything cheaper. That is what the term does. Stretching a loan from 60 to 84 months lowers the payment and RAISES the total interest, because you are borrowing the same money for longer. The monthly figure improves while the deal gets worse - and it is a genuinely effective sales technique precisely because the payment is the number people feel. What is NOT included: sales tax, registration, documentation and dealer fees, extended warranties, gap insurance and anything else added at signing. Several of those are commonly rolled INTO the loan, which means you pay interest on them for the whole term. If a fee is being financed, add it to the price rather than treating it as separate. Also not included are the running costs, which over a few years frequently exceed the interest: insurance, fuel, servicing, tyres and depreciation. Depreciation in particular is usually the single largest cost of owning a new car and never appears on any payment schedule.

Common questions

Why does a longer term cost more when the payment is lower?

Because you are borrowing the same money for longer, and interest is charged for the whole time you owe it. On 27,000 dollars at 7.5 percent, going from 60 months to 84 drops the payment by about 127 dollars and adds about 2,326 dollars of interest. The monthly figure improves while the deal gets worse - which is exactly why it is such an effective sales technique. Change only the term in the calculator and watch both numbers move in opposite directions.

Should I negotiate on the payment or the price?

The price, always, and then the rate. A monthly payment can be lowered without anything getting cheaper - by stretching the term, or by moving costs into a longer loan - so negotiating on it hands over the one lever that does not require the seller to give up anything. Agree the price of the car first, agree the trade-in separately, and only then discuss financing.

What is missing from this calculation?

Sales tax, registration, documentation and dealer fees, extended warranties and gap insurance - none are included. Several are commonly rolled INTO the loan, which means paying interest on them for the whole term, so if a fee is being financed, add it to the price box rather than thinking of it separately. Running costs are absent too: insurance, fuel, servicing, tyres and depreciation, which together usually dwarf the interest.

Is a bigger deposit worth it?

It reduces both the payment and the total interest, because you are borrowing less from the start. It also protects you against being underwater - owing more than the car is worth - which is a real risk on a long loan against something that depreciates quickly. That said, money going into a deposit is money not doing anything else, and a very low promotional APR changes the arithmetic considerably.

What about 0% finance offers?

The calculator handles a 0 percent APR properly - it switches to plain division, so the payment is simply the amount divided by the months and the interest is zero. The thing worth checking is what the offer costs elsewhere: promotional financing is frequently an alternative to a cash rebate rather than an addition to it, so compare 0 percent against the discounted price plus a normal loan before assuming free money.

Why show interest as a percentage of what I borrowed?

Because it makes two very different loans comparable at a glance. A dollar figure depends on how much you borrowed, so a big loan always looks worse; the share tells you how expensive the borrowing itself is. Paying 20 percent of the financed amount in interest is the same quality of deal whether the car cost fifteen thousand or fifty.

Take it further with AI

Copy this into ChatGPT or Claude with your own numbers filled in. It hands over the figures this calculator worked out, so the answer is built on real arithmetic instead of a guess.

I used the Car Loan Calculator at https://www.bfcbrilliance.com/tools/car-loan-calculator.

What I entered:
- Price of the car ($): ___
- Deposit or trade-in ($): ___
- APR (%): ___
- Loan term (months): ___

What it calculated:
- Monthly payment: ___
- Interest you will pay: ___
- What the car really costs: ___
- Amount financed: ___
- Interest as a share of what you borrowed: ___

Use those figures as given — they are already worked out, so please don't recalculate or estimate your own. Help me turn them into a plan: what to buy or do, in what order, roughly what it should cost, and the mistakes people most often make with this job.

Keep this general and do not give financial advice — flag where I should talk to a qualified adviser.

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