Auto Loan Calculator
Auto Loan Results
Loan Breakdown
Financing Tips
Auto Loan Financing Guide
What is an Auto Loan?
An auto loan is a secured loan used to purchase a vehicle, where the car itself serves as collateral. If you fail to make payments, the lender can repossess the vehicle. Auto loans typically offer lower interest rates than unsecured loans due to this collateral arrangement.
Types of Auto Financing
New Car Loans
- • Lower interest rates
- • Longer loan terms available
- • Manufacturer incentives
- • Full warranty coverage
Used Car Loans
- • Higher interest rates
- • Shorter loan terms
- • Lower purchase prices
- • Limited warranty options
Key Auto Loan Terms
APR (Annual Percentage Rate)
Total cost of borrowing including interest and fees
Loan-to-Value Ratio
Percentage of vehicle value being financed
Gap Insurance
Covers difference between loan balance and car value if totaled
Auto Loan Calculation Formula
Monthly Payment: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ-1]
Where: M = Monthly payment, P = Principal, r = Monthly rate, n = Number of payments
Total Vehicle Cost: Vehicle Price + Sales Tax + Fees - Trade-in - Down Payment
Total Interest: (Monthly Payment × Number of Payments) - Principal
Factors Affecting Auto Loan Rates
- Credit Score: Higher scores qualify for better rates
- Vehicle Age: Newer cars typically get better rates
- Loan Term: Shorter terms usually have lower rates
- Down Payment: Larger down payments reduce lender risk
- Income and Employment: Stable income improves terms
- Debt-to-Income Ratio: Lower ratios are preferred
Smart Auto Financing Tips
- • Get pre-approved before shopping to know your budget
- • Shop around with banks, credit unions, and dealers
- • Consider certified pre-owned vehicles for value
- • Put down at least 20% to avoid being upside-down
- • Keep loan terms under 5 years when possible
- • Factor in insurance, maintenance, and fuel costs
Auto Loan Comparison by Credit Score
| Credit Score Range | Average New Car Rate | Average Used Car Rate | Monthly Payment ($20K loan) |
|---|---|---|---|
| 781-850 (Super Prime) | 5.64% | 7.66% | $377 |
| 661-780 (Prime) | 7.01% | 9.73% | $396 |
| 601-660 (Near Prime) | 9.60% | 15.08% | $426 |
| 501-600 (Subprime) | 15.24% | 19.87% | $483 |
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