How it works
What this estimate calculates
The amount financed starts with the vehicle price and entered taxes and fees, then subtracts the down payment and trade-in value. The monthly estimate applies the entered interest rate as a nominal rate divided by 12 in a fixed-payment model; total interest is scheduled payments minus financed principal.
Assumptions to keep in mind
- The interest rate is fixed, payments are monthly, and the loan is paid on schedule. Daily-accrual and precomputed-interest contracts can differ.
- Taxes, registration charges, dealer fees, rebates, and trade-in tax treatment vary by location and transaction.
- Insurance, fuel, maintenance, repairs, and depreciation are outside the loan payment.
Reviewed references
Sources behind this calculator
Last reviewed: . These references support the concepts and context; their publishers do not review or endorse TrueCost.
- Take Control of Your Auto Loan (opens in a new tab)Consumer Financial Protection Bureau
Amount-financed components, equal-payment examples, and comparing the total cost of borrowing.
- Truth-in-Lending disclosure for an auto loan (opens in a new tab)Consumer Financial Protection Bureau
The distinction among interest rate, APR, amount financed, finance charge, and total of payments.
- Simple versus precomputed auto-loan interest (opens in a new tab)Consumer Financial Protection Bureau
Why daily-accrual or precomputed-interest contracts can differ from this monthly model.
Questions people ask
What is the difference between APR and interest rate?
APR can include certain finance charges, while the interest rate is applied to the balance. This calculator asks for the interest rate because it uses that rate in the payment formula; compare the separate APR in a lender's disclosure too.
Why does a longer loan term lower the payment?
The balance is spread across more payments. That can reduce the monthly amount while increasing the time interest accrues and often the total interest paid.
Does the estimate include every cost of owning a car?
No. The payment covers the modeled financing. Add insurance, fuel or charging, maintenance, registration, parking, and expected repairs when judging the full budget.
Use the result as a starting point
Try a conservative scenario and an optimistic one. If the decision only works under one narrow set of assumptions, that is useful information. For a purchase, loan, tax, or investment decision, confirm the final figures with current documents and an appropriately qualified professional.
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