Car payment calculator

By Allstate

Last updated: November 2023

This calculator can help you determine how much your monthly vehicle payments may be. Loan amount, loan term, and interest rate all factor into the calculation. Loan amount is determined by the size of your down payment, any applicable rebates, and your trade-in vehicle value. The published book value can help you determine the amount of your trade in, which will be subtracted from the purchase price. Loan terms can range from 24 to 72 months.

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What do I need to consider to calculate my monthly car payments?

If you’re considering taking out a loan on a vehicle, it’s important to gauge whether you can comfortably afford the monthly payments. Important factors to consider when calculating your monthly car payments include the vehicle’s purchase price, your down payment, loan term and interest rate. You’ll find these variables listed in the Allstate car payment calculator above – and, luckily, it’s simple to use.

Using the auto payment calculator

Enter the value for each field and the calculator will provide an estimate of what you might pay each month on your car. Select the advanced tab to enter three additional values for a more detailed monthly payment estimate. You can adjust the values of each input until you find a monthly payment that meets your budget needs.

Below is a breakdown of each input that you’ll enter and how they contribute to the overall monthly car payment costs.

Purchase price

The purchase price is the total value of the vehicle that you’re financing. The total price may include registration fees, sales taxes and costs associated with transporting a vehicle from the automaker to the dealership, according to Credit Karma.

Down payment

A down payment on a vehicle is a certain percentage of the total cost of the car that you pay upfront. Down payments are often anywhere from a minimum of 10%, up to 20%, depending on whether yours is a used or new vehicle, says Car and Driver. Larger down payments can typically help reduce monthly payments.

Loan term

A loan term is the length of time it’ll take to pay off your loan and is typically expressed in months. Shorter terms typically reduce the total cost of the loan, according to the Consumer Financial Protection Bureau (CFPB).

A longer loan may lower monthly payments but often means higher interest rates. There’s also the risk of “negative equity” associated with longer loans, which is when you owe more than the car’s value.

Interest rate

The interest rate is a percentage of the entire loan amount and is used as a fee for borrowing money from the lender. Interest rates on car loans don’t include fees that you pay to get the loan, according to the CFPB. The annual percentage rate of a loan (APR) is like an interest rate except it does include fees and gives you a more well-rounded idea of what you’re paying.

Cash rebate

A cash or car rebate is a discount that manufacturers give to qualifying car buyers to boost sales, according to Kelley Blue Book (KBB). The discount is expressed in the form of a cash amount. Depending on the manufacturer, it might be money paid in a lump sum or money that a buyer can use toward a down payment.

The rebate amount depends on a lot of things, like the car make and model, seasonal factors and more, adds Car and Driver. It may be anywhere from $500 to $5,000, depending on said factors.

Trade-in value

One way to cut down the cost of buying a new car is by trading in an old one, says KBB. How much you can lower the cost of your car depends on the value (“trade-in value”) of your existing car.

Amount owed on trade-in

The remaining balance after you trade in an old car may depend on a couple of things – for instance, how much you still owe, if anything, on the existing car. If your car is worth more than the outstanding balance, you can use the added value toward paying for the new car, according to Bankrate. But if you owe more than the vehicle’s value, a trade-in for a cheaper vehicle may be your best option.

Be prepared for the extra fees

On the face of them, car loans consist of a down payment and monthly payments to cover the rest of the loan, plus interest. But underneath that are hidden fees worth factoring in to calculate monthly car payments.

Barring states like Alaska, Delaware, Montana, New Hampshire and Oregon, dealerships are required to pay a sales tax for each car bought off the lot, according to KBB. They push this cost onto you, the buyer. Taxes vary from state to state, and sometimes local taxes are applied too.

There may also be a host of other fees included in a financing contract. These include the licensing and registration fees. Luckily, they tend not to be very high – depending on your state, registration fees may range from $40 to a little more than $260.

Leasing tends to have more fees and penalties, adds KBB. These include caps on mileage, drive-off fees, cleaning fees for the end of the lease and more.

As mentioned above, both car financing and leasing typically come with a gap insurance requirement. And most auto insurers require comprehensive and collision coverage to purchase gap insurance.

One thing to be on the lookout for are bait and switches. If a car dealer tries selling a vehicle more than their advertised, they’re breaking the law, says the CFPB. They recommend bringing the ad with you to the dealer.

How much should my down payment be on a car loan?

A down payment of 10% or 20% of the vehicle’s purchase price are the standard figures for used and new cars, respectively. That’s because putting down less runs the risk of negative equity, according to Car and Driver. Negative equity is when you owe more than the vehicle is worth. Plus, the more you can comfortably put down, the lower monthly payments are likely to be.

No-money-down loans may also be an option at certain dealerships, adds Car and Driver. But note that no-money-down loans run the risk of negative equity, and payments are usually much higher than a standard loan, given that you’re borrowing the car’s value and as a result paying more interest.

Should I choose a fixed or variable rate for my car loan?

Remember, the interest rate is the fee you pay to obtain a loan and is expressed as a percentage of the overall loan. The Fed sets the benchmark for interest rate, explains Bankrate. And they may be increased or decreased depending on current economic conditions.

A fixed rate means that the interest on your loan stays the same throughout the entire repayment period, says the Federal Deposit Insurance Corporation (FDIC). This can provide peace of mind because you'll always know exactly how much you need to pay each month. On the other hand, a variable rate means that the interest can change over time based on the market, adds the FDIC. While this could lead to lower initial rates, it also means that your monthly payments might go up or down, which can be a bit uncertain.

One of the main benefits of choosing a fixed rate for your car loan is stability. You won't have to worry about your monthly payments increasing unexpectedly. This can be especially helpful if you're on a tight budget or prefer to have a clear understanding of your financial commitments. Additionally, a fixed rate can make it easier to plan for the future, as you'll know exactly how long it will take to pay off your loan.

A variable rate can sometimes offer lower initial interest rates. This means that in the beginning, you might pay less each month compared to a fixed-rate loan. However, it's important to remember that variable rates can change, and they may go up over time. This could potentially lead to higher monthly payments down the road. Choosing a variable rate can be a bit like taking a small gamble on future interest rates. It's important to carefully consider your financial situation and your comfort level with potential fluctuations in your monthly payments before making a decision.

What loan term (months) should I choose for my car loan?

Many vehicle owners choose car terms in the range of 72 to 84 months, according to Forbes. But you can opt for a loan term of only a few months up to 84 months.

A long term typically has lower monthly payments compared to short car loans, says Forbes. The drawback is a higher interest rate plus paying much more than the vehicle is worth when you bought it, given that vehicles depreciate over time – and your vehicle is likely to depreciate more during that time compared to a shorter loan.

A longer loan term also runs the risk of negative equity, warns Bankrate. Even if you were to trade your vehicle in, it might not be enough to pay off the loan.

Remember, rates and loan terms may vary from lender to lender. For this reason, it may be good measure to prequalify for a loan, says Fox Business. This allows you to compare interest rates and loan terms between companies.

How much can I save in interest by choosing a shorter loan?

Longer loans typically have higher interest rates than shorter loans. That’s because a longer loan comes with greater risk of missing a payment than with a shorter loan, according to Bankrate. A slightly higher interest rate helps lenders offset that risk.

But lenders also look at other factors to determine your loan interest, including but not limited to debt-to-income ratio, credit score and others.

To determine exactly how much you could save with a shorter loan, speak with a lender, advises Bankrate. There are also one among many loan interest calculators online.

Remember, rates and loan terms may vary from lender to lender. For this reason, it may be good measure to prequalify for a loan, says Fox Business. This allows you to compare interest rates and loan terms between companies.

How does my credit score impact my car loan interest rate?

Another factor that affects your interest rate on top of loan terms is your credit score, according to Forbes. It’s a way for lenders to assess the likelihood you’ll pay off the loan. The better your credit, the lower the interest rate will likely be.

If you’re still working on improving your credit, however, you might apply for a loan with a co-signer as an alternative. Just make sure your co-signer has good or great credit. They’ll be on the hook for paying back what you owe if you aren’t able to pay off the loan. For this reason, pick someone you can trust – it’s more common than not to use friends and family as co-signers.

Should I lease or buy my car?

Getting a loan (“financing”) to buy a vehicle entails borrowing money from a bank or lender and paying the vehicle off monthly until you own it outright. Financing a vehicle also includes an initial down payment and interest on the loan amount.

Leasing essentially means you’re “renting” a car for a specified amount of time, says Forbes, with loan terms of usually 36 months or more. But whether buying or leasing is right for you depends on your personal needs, as there are pros and cons for each.

Pros of buying a car

Buying a car has higher monthly costs but you’ll at least own the vehicle once it’s paid off, explains Consumer Reports. And despite those higher costs, you stand to save more money in the long run, according to Edmunds.

Buying gives you the flexibility to sell the car whenever you want and, as mentioned above, you can use the car as a trade-in for a new one, which means you’d potentially recoup costs. You also likely won’t be subject to modification and mileage restrictions that often come with vehicle leases.

Plus, once you’ve paid off the car, you can drop certain auto insurance coverages required by your lender – like gap insurance.

Cons of buying a car

While financing a car may allow you to recoup the costs with a trade-in, remember that longer loan terms, which often come with financing, run the risk of negative equity. And attempting to solve the problem by pushing what you still owe on your old car toward a new loan means you’d be financing your old and new car simultaneously, warns Consumer Reports.

Additionally, owning a car isn’t like owning a house, a car depreciates in value over time, explains Edmunds. In which case, money on your vehicle wouldn’t go toward a savings asset, like a house, but would rather be tied up in repairs and ongoing maintenance costs.

Pros of leasing a car

Leasing is generally cheaper than financing because you’re not paying the car’s full price, says CNBC. And if you prefer to save on driving a higher-end vehicle, leasing may be the way to go, adds Forbes. Leasing typically has a lower sales tax, too.

Buying a leased vehicle may also be an option. You’d just need to check with the dealer if a lease buyout is allowed, Bankrate recommends. You might even be able to make money purchasing and re-selling your leased vehicle, adds Forbes.

Also, aficionados keen on many car-driving experiences easily change cars every couple of years, according to Edmunds. That’s due to the shorter loan terms that come with leasing and fewer trade-in hassles at the end of a lease.

Cons of leasing a car

Leasing has smaller monthly payments – but leasing costs more in the long run than purchasing a car and keeping it for years, according to Edmunds. There may also be high maintenance costs at the end of a lease.

Ownership may be an option at the end of a lease, depending on the lease contract. But understand how taxes around buying leased cars work in your state, advises Forbes. A dealership can be a good resource in that regard.

Much of the decision-making boils down to where your priorities lie. Buying is more expensive, but you’ll own the car outright at the end. A buyout with leasing needs to be explicitly stated in the contract. Maybe you prefer lower monthly payments – not to mention the option to switch cars every couple of years. Keep these things in mind when using the monthly car payment calculator. It may be the perfect starting point for your decision-making process.

How do I maximize my trade-in value?

A vehicle trade-in can be a quick, easy way to lower monthly payments on your next car. It can be much faster than trying to sell the vehicle yourself and using those funds to purchase a new one. Trade-ins typically entail bringing your old/current car to the dealership and leaving with a new one, says Car and Driver.

But there are important things to keep in mind when maximizing your trade-in value. Here are some ways to get the biggest bang for your buck when it’s time to trade your car in.

Find out your car’s market value

To get the best value for your car, make sure that you know the current resale value of your vehicle to begin with. Use resources like Kelly Blue Book, Edmunds and CarMax. Knowing what your vehicle is worth is critical to when trying to use any auto payment calculator.

Stay up to date with repairs

You want your car to be in the best shape before trading it in. The better your vehicle’s physical condition – and the fewer mechanical problems there are – the more value you’ll able to get out of it as a trade-in, explains Bankrate. That means taking care of car repairs, engine problems and detailing your car beforehand. It’s also worth researching any recalls associated with your vehicle model – related repairs may be free of charge. Additionally, bring records of the maintenance you’ve done to the dealership as proof that the car was properly cared for under your ownership. This looks good to both dealerships and car buyers.

Make the trade-in look presentable

On top of repairs, make sure your vehicle’s presentable, advises KBB. A clean, detailed car can help you net the biggest bang for your buck.

Shop your trade-in around

You may not want to go with the first offer you get, says Car and Driver. They advise shopping around to at least three different dealers. That way, you can use the offer of one dealer to negotiate the offer of another.

Negotiate the price of your vehicle

Separate the trade-in negotiation from the vehicle purchase negotiation, advises Bankrate. Dealers may push for one deal because it could mean higher profits at the expense of the customer. Get everything in writing, too, so that the dealership can’t renege on their offer. As mentioned before, having everything written down gives your bargaining power when shopping around elsewhere.

Consider the timing of selling your trade-in

Seasonal and market factors may positively affect the value of your specific make and model. Selling your car in the warmer months, for instance, may get you the most value, says Business Insider. Especially when it comes to convertibles and sports cars, which have a high demand in the spring and summer. Trucks and SUVs on the other hand typically do well year-round. But there are other factors, too. If, for example, there is a high demand for your particular make and model in your area, then it might be best not to wait, according to Car and Driver.

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