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How Much Will My Car Payment Be

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How Much Should We Pay For Our New Car?

A car could be one of the biggest purchases youll ever make. Thats why its important to understand how various factors can affect how much you pay to finance a car.

Whether youre just starting to shop for a car or are ready to finance a particular make and model, getting a sense of your monthly loan payment can help with your decision.

Our calculator can help you estimate your monthly auto loan payment, based on loan amount, interest rate and loan term. Itll also help you figure out how much youll pay in interest and provide an amortization schedule .

Keep in mind that this calculator provides an estimate only, based on the information you provide. It doesnt consider other factors like sales tax and car title and vehicle registration fees that could add to your loan amount and increase your monthly payment.

Here are some details on the information you might need to estimate your monthly loan payment.

How Much Is The Car Payment Really Costing Me

Its just $350 a month.

Everyone has a car payment.

Sound familiar?

See, on the surface, $350 or even $500 a month seems innocent. But then, your dog needs surgery. Or your almost-teenager needs braces. Ordang ityou just need more room in your monthly budget for life.

Wheres your margin? Oh yeah, its going to the bank for five more years.

On a practical level, your monthly car payment is costing you, well, money. And lots of it.

But even if you could squeeze out that monthly payment without too much stress, think about the extra youre paying in interest. Thousands of dollars. And oh yeaha new car with a loan will jack up your auto insurance.

Instead, that money could be beefing up your savings account. Or you could even have enough to buy a reliable used car in straight-up cash. Then you could get the right auto insurance at the right price and keep your costs down.

Let’s say you bought a used car with cash, and instead of wasting $500 a month on a car payment, you invested that money in a Roth IRA instead. After a 40-year period, that investment will be worth $4.3 million dollars.

So, back to our original questionhow much is a car payment really costing you? More than 4 million dollars over the course of your life. Thats how much.

Pros And Cons Of A 72 Month Car Loan

If you are in the market for a car the 72 month car loan is a popular choice, but you need to be sure its right for you. Below you can compare the advantages and disadvantages of a 72 month car loan.


  • The longer the loan term, the smaller your monthly payments will be.

  • Lower monthly payments mean more financial flexibility.


  • Longer-term loans typically have higher interest rates than shorter-term car loans.

  • You can end up owing more on the car than it is worth due to .

  • On a new car, the warranty will likely expire long before the loan is paid off adding car maintenance to your transportation bills.

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What Is The Average Car Payment In The Us

If you’re in the market for a new car, you might be asking yourself how much is the average car payment? Experian reports that, as of the second quarter of 2020, new vehicle owners paid an average of $568 a month on their vehicles, while used car owners paid $397. Since these figures represent monthly car payment averages, they do not necessarily represent what any single vehicle owner is actually paying. Instead, these figures indicate a certain ballpark range that vehicle owners fall into depending on their own personal and financial details.

So, how much should your car payment be? The average U.S. car payment for new and used vehicles should give you a starting point for your own monthly payments. To get a more concrete figure, you’ll need to consider your creditworthiness and income level, the type of car you’re purchasing and its cash value, and the size, terms, and length of your auto loan.

In Fact Dont Go To A Dealership At All

How Much Should My Car Down Payment Be?

For decades, car dealerships have employed seedy manipulation tactics like including hidden costs, undervaluing your trade-in, and telling outright lies just to get you in the door.

And now, with lower inventory and increasing pressure from Carmax and Carvana, theyre getting bolder and more desperate.

You can still negotiate a good deal with dealerships, but youll need to enter the lions den ready to fight. For everyone else, Carmax is a much better choice.

Read more: Ex-car salesman tells all: how to beat the auto dealerships at their own game

Also Check: What Happens If Your Car Gets Towed

What Will Your Monthly Car Payment Be

Thinking about buying a car with a loan?

Don’t know what the payment will be, or if you can afford it?

It’s important to figure out your monthly car payment to see if it fits your budget.

Thankfully, this Car Payment Calculator offers fast results, revealing your monthly car payment to help you make the right purchase decision.

Simply enter the car purchase price, down payment, trade-in allowance, interest rate, and loan term. Click Calculate Car Payment and this calculator will do all the math for you revealing the monthly car payment.

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What Is The Average Interest Rate For A Car Loan

According to Statistics Canada, the average car loan interest rate in Canada is 5.8%. The average buyer can expect to pay anywhere between 4% to 7% interest on their car loan, depending on whether the car is new or used and whether the interest rate is fixed or variable.

Examples of interest rates

The following example shows the amount of interest you could end up paying for a brand new $40,055 car assuming a loan term of 7 years and no down payment.



Based on this analysis, a person with poor credit might have to pay over $20,000 more in interest over the course of their loan than a person with excellent credit. This is why it makes sense to build up your credit score before you sign on to a car loan.

Read Also: How To Tell If Car Needs Alignment

Faqs About How Much To Put Down On A Car

  • Should I include taxes and fees in my down payment?

    It depends on how you plan on financing your car. If you plan on including taxes and fees as part of your loan amount, then you may want to calculate your down payment based on them.

  • Can I use a credit card to make a down payment?

    It depends on your lender, though this is best saved as a last resort. Credit cards tend to come with higher interest rates than car loans, so it might be more cost effective for you to simply forego the down payment and take out a larger loan. Learn more in our guide on using a credit card to pay for a vehicle.

  • Can I buy a car without a down payment?

    Yes, its possible to buy a car with no down payment, but its not recommended. Even a small down payment will decrease the amount you need to borrow and lower the cost of financing your car overall. When saving up for a down payment, remember that how much you put down on a car will impact the interest rates you qualify for and how much extra you end up paying in interest.

Why Using A Car Loan Calculator Is Important

My Car Payment is $1,200/Month!

Buying a car can be an expensive endeavor, and most people cant afford to pay cash outright. Luckily, consumers who need cars can obtain auto loans through car dealerships, banks, credit unions, and even online lenders.

Auto loans are secured personal loans, with the car acting as collateral. This means if you fail to make payments, your lender can repossess the vehicle and sell it to make its money back. Because the loans are secured, the interest rate is often lower than what youd find with other types of consumer debt, such as credit cards and personal loans.

Your interest rate will be affected by various factors, however, such as whether youre buying a new or used car if you have a trade-in the amount of your down payment your credit score and income and the length of your repayment loan term. Comparison shopping among lenders is also important for finding the best deal and an auto loan calculator can help by estimating your monthly payments and total costs of borrowing.

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Buying A Car With Cash Instead

Although most car purchases are made with auto loans in the U.S., there are benefits to buying a car outright with cash.

There are a lot of benefits to paying with cash for a car purchase, but that doesn’t mean everyone should do it. Situations exist where financing with an auto loan can make more sense to a car buyer, even if they have enough saved funds to purchase the car in a single payment. For example, if a very low interest rate auto loan is offered on a car purchase and there exist other opportunities to make greater investments with the funds, it might be more worthwhile to invest the money instead to receive a higher return. Also, a car buyer striving to achieve a higher credit score can choose the financing option, and never miss a single monthly payment on their new car in order to build their scores, which aid other areas of personal finance. It is up to each individual to determine which the right decision is.

Should You Buy Or Lease A Car

Now, lets talk about buying versus leasing.

We know why a lease can be tempting you get a brand new car for a lower monthly payment than a car loan. Whats not to like?

Well, at Money Under 30, were torn on the idea of leasing a car. Leases are riddled with hidden costs that drive up the monthly payment, such as higher insurance rates, mileage charges, and the results of the dreaded , where the dealer will charge you for every nick and scratch bigger than a credit card.

As a result, Allyson Baumeister, a member of the Texas Society of Certified Public Accountants, says:

Buying a car is almost always better than leasing.

Recommended Reading: Where Can I Scrap My Car

How Credit Scores Affect Apr

Annual percentage rate is the cost you pay each year for financing – it includes finance charges, fees, and other charges. Because financial institutions use credit scores to make sure youre able to repay a debt, creditors usually check your credit before quoting you an APR. The better the credit score, the more favorable APR you may receive.


Hit Calculate To See What Your Monthly Car Payment Would Be

How Much Would My Payment Be For A Car

Youll see three results:

What your monthly car payment would be:

Dont forgetthis is what youd pay every single month for the entire loan term. And with the average new car payment at $576 for almost 70 months, that’s thats a really long time to pay on a car before you own it.2 Whew!

What youd actually pay for the car:

Remember what we said about interest rates? This number represents the all-in price of the car because of them.

How much interest youd pay during the term:

This shows you how much of your all-in price isnt even going to the car. Its money youre paying the lender just for the privilege of borrowing their money.

If you want to play around with your results, just use the sliders to change the numbers. Adjust the slider on the car price to see how your monthly payment raises or lowers. Or you can adjust the slider on the results to see how the car price changes.

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How Much Car Can I Get For $500 A Month

The answer depends on how much you put down, the interest rate and the length of the loan. Let’s say you put no money down and took out a 72-month loan with a 6% APR. In that example, your $500 monthly payment would get you a car that sells for between $25,857 and $28,900. If you were leasing, you could get a more expensive car for the same money, but you would not own it after the three-year lease term is up. Learn more

Can I Get A Loan With A Credit Score Of 600

Yes. The credit bureau Experian considers the range of 580-669 as “fair” or “subprime” borrowers, and about 17% of people fall into this credit score segment. It is possible to get a loan with a credit score of 600, but you’ll likely have to make a larger down payment and have a higher interest rate than someone with a better credit score. Learn more

Read Also: How Much Is My Car

How Can I Calculate My Car Payment

Our loan calculator shows how much a loan will cost you each month and how much interest you will pay overall. It can be helpful to use the calculator to try out different scenarios to find a loan that fits your monthly budgetand the amount of total interest you’re willing to pay.

The best way to get a lower auto loan interest rate is to improve your credit score. If you have a low credit score, consider holding off on a car purchase until you can improve your score.

To calculate your monthly car loan payment by hand, divide the total loan and interest amount by the loan term . For example, the total interest on a $30,000, 60-month loan at 4% would be $3,150. So, your monthly payment would be $552.50 .

If you took a three-month payment freeze on a loan due to a COVID-19-related financial hardship, your subsequent repayments could be slightly higher to compensate.

The longer you take to repay a loan, the more interest you’ll pay overalland you’ll likely have a higher interest rate, as well. Make a down payment, if possible, and aim for the shortest loan term possible with a monthly payment you can still afford. And keep in mind that a car comes with expenses beyond the loan payment. Be sure you’ll have money left over to pay for car insurance, gas, parking, maintenance, and the like.

Choose A Short Loan Term Or A Different Payment Plan


The terms you’ll negotiate for your auto financing include more than just the sticker price and the interest rate you agree to the terns also include the way in which you pay. The standard agreement includes monthly payments over the course of five years, but you don’t necessarily have to accept such an arrangement.

If you know you can handle larger monthly payments, you could opt for a shorter term for financing, say three or four years instead of five. Or if you want to slip in an extra payment on your loan each year, you could pay biweekly instead of monthly.

Although there are twelve months in a year, there are 52 weeks, which makes for 26 biweekly payments . Selecting such terms for repayment will reduce the amount you pay in interest and save you money over time.

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How Can I Buy A Car Without A Car Payment

Unlike popular belief, it is possible to buy a reliable used car with cash and not have a monthly payment strapping you down.

The first step is to buy a car you can afford with the cash you have in the banklets say its $4,000. Next, take what you wouldve spent on a car paymentaround $500and put it in your savings account each month for a year.

And as one of our fave money experts, Rachel Cruze, points out, there are a ton of great cars out there for under $10,000, like these:

  • 2010 Subaru Outback
  • 2010 Honda Accord
  • 2011 Toyota Camry

But heres the best partyou dont have to stop with an $8,000 or $10,000 used car. Take that same principle we just taught you, and do it again. Then, in another year, youd have $6,000 more dollars to put toward another upgraded car!

Now, you have a paid-for car you loveand you still did it quicker than the average five-to-six-year loan term. Take that, car payment!

The truth is, this concept goes beyond freeing up your monthly budget. It frees up your lifeand helps you have more money to put toward important things that matter to you, like saving more money or investing for retirement.

Remember, youre the superhero herenot the car payment. Get that cape ready, Superman. You can do this!

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How Much Should I Spend On A Car Based On Salary

January 30, 2019 Budgeting Advice

Buying a car gives you a lot of freedom. You no longer have to live life by the bus schedule and you can stop bugging friends and family for rides all over town. You can hit the road whenever you like, and listen to whatever music you want on the way there. Unfortunately, that freedom comes at a cost.

Cars are getting more expensive

The average cost of both new and used vehicles are on the rise. According to data from Kelley Blue Book and Edmunds, the average cost of a new car in 2018 was $37,577 and the average used car cost $20,084 the highest price since 2005.

With cars getting more expensive and Canadian budgets getting tighter, its important to be realistic about what you can afford to spend on a new vehicle. But, how much should you spend on a new car?

Everyones budget is different

Even if you and your neighbour make the same amount of money, your lifestyles, vehicle priorities and debt situations are probably quite different. Budgets dont have a one-size-fits-all solution, but there are some expert-recommended spending ratios that can make it easier to figure out how much car you can afford without going into the red.

Here are 4 salary equations to consider:

Debt-to-income ratio

Figuring out your debt-to-income ratio is a good way to see how much debt youre already carrying and how much new debt you can responsibly take on and, by extension, how much you can afford to spend on a new car.

10% of your salary

20% of your salary

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