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Car (Auto) Loan Payment Calculator: New and Used Cars and With Trade-in and Down Payment

Car Loan Payment Calculator





How do I use the car loan calculator?

Our car calculator is designed to make the process of calculating your expected repayments simple. Follow these three simple steps to learn more about options available to you today.

  1. Input your loan amount, interest rate and the expected term of the loan.
  2. Press the big orange button!
  3. Our calculator will then show you the monthly cost of such a loan.

A car loan is a type of personal loan which is used to purchase a new or used car. They are a type of personal finance that are usually unsecured, meaning a borrower’s credit score is key to being approved and securing the best interest rates.

These loans are arranged on a capital repayment basis, making them a form of amortising debt. This means that they are fully repaid at the end of the term if all payments are made on time and in full. They can usually be repaid early without penalty should the borrower choose to make extra payments, known as overpayments.

A car loan calculator can be used to calculate your monthly payments based on your loan amount, interest rate and loan term. Choosing to pay a down payment (deposit) or trade in your old car will usually allow you to borrow less, reducing your monthly payments.

Car (Auto) Loan Payment Calculator for Used Cars

Used car loans are a type of amortizing debt, meaning they use a compounding interest calculation, rather than a simple calculation.

As an example, a £10,000 loan at a rate of 4.5% per annum over a 5 year term would see the amount of interest due each month gradually reduce, while the payment stays the same. In month 1, your interest amounts to £37.50, and in month 48 only £8.85 of interest is charged.

Car (Auto) Loan Payment Calculator with Interest

Your monthly repayments depend on 3 factors, the amount you borrow, your car loan interest rates and the term you borrow over. This means that the interest that you pay and the interest rate that the lender charges are connected, but not the only part of the calculation.

Below is an example of a car loan for £20,000 at a rate of 6% per annum over a 5 year term. It shows how the amount of interest paid each month changes as payments are made and the balance reduces.

MonthOpening balanceMonthly paymentPaid off balanceInterest paidNew car loan balance
Month 1£20,000.00£386.66£286.66£100.00£19,713.34
Month 2£19,713.34£386.66£288.09£98.57£19,425.25
Month 3£19,425.25£386.66£289.53£97.13£19,135.72
Month 4£19,135.72£386.66£290.98£95.68£18,844.75
Month 5£18,844.75£386.66£292.43£94.22£18,552.32
Month 6£18,552.32£386.66£293.89£92.76£18,258.42
Month 7£18,258.42£386.66£295.36£91.29£17,963.06
Month 8£17,963.06£386.66£296.84£89.82£17,666.22
Month 9£17,666.22£386.66£298.32£88.33£17,367.89
Month 10£17,367.89£386.66£299.82£86.84£17,068.07
Month 11£17,068.07£386.66£301.32£85.34£16,766.76
Month 12£16,766.76£386.66£302.82£83.83£16,463.94

Car (Auto) Loan Payment Calculator with Down Payment

Your monthly car loan payments can be reduced by paying a larger down payment, or deposit. For a full down payment definition, read our guide. A larger deposit will reduce your loan balance and result in you paying lower monthly payments and less interest.

As an example, a £20,000 loan at 6% interest over a 5 year term would see you pay £3,199.60 in interest. A down payment of £4,000 would reduce your loan to £16,000 and see the total interest drop to 2,559.19 – saving you £640.41 in interest.

Car (Auto) Loan Payment Calculator with Trade in

A car loan with trade in allows you to effectively use the value of your old car to act as a deposit instead of using cash. This has the effect of reducing your loan balance and therefore the interest paid.

Much like the calculation above, a trade in can save you significant amounts of interest.

Car (Auto) Loan Payment Calculator with Credit Score

Your credit score will impact any calculation of your potential monthly car loan repayments. This is because your credit score impacts the interest rate that you’re charged. There are a number of misconceptions about credit scoring, so asking the question ‘what is a credit score?’ is a good place to start.

Credit scoring isn’t a centralised system, instead, each lender has its own method of assigning scores to borrowers based on their credit history.

A strong credit score will result in a lower interest rate for borrowers, while a poor one may mean a higher rate - or even a declined application.

Car (Auto) Loan Payment Calculator with Extra Payments

When making additional principal payments, known as overpayments, your loan balance will reduce more quickly. This gives the borrower 2 options – reducing their monthly payments or repaying the loan early by sticking to their current agreed payment and amortising the loan faster.

Either way, their overpayment will reduce the total interest paid on their loan, saving them money.

Car loans are a type of amortising loan – read our amortising loan definition for more information on how they work.

Car (Auto) Loan Payment Calculator with Amortization

A car loan calculator with amortisation allows you to calculate the costs of taking out a car loan on a capital repayment basis, meaning it amortises over the loan term. Amortising loans are a universal concept, with the formula remaining the same throughout the world, regardless of the country of origin and currency used. Read our amortised loan definition for more.

What to know about Auto Loan Calculation Formulas?

As mentioned above, the key factors in the calculation are the interest charged, the loan size and the loan term.

  •       A higher loan will result in a higher monthly payment, reducing the loan size will reduce your payments.
  •       A higher interest rate will result in a higher monthly payment than a lower interest rate.
  •       A shorter loan term will result in a higher monthly payment than a longer loan term.

You can change these 3 factors when trying to find the right loan for your monthly budget to find the best balance for your needs.

What are the Fees in Auto Loan Calculation?

Generally, the fees charged on these loans are minimal, but it’s always worth checking for any large hidden fees including the following:

  •       Arrangement fees
  •       Late payment fees
  •       Early repayment fees

Any large fees aren’t included in the interest rate, but allowance for them should be included in the Annual Percentage Rate (APR). For this reason, APR is considered a more accurate and simpler way to compare car loan products than the interest rate alone.

Does Car Loan Calculation Formula change based on Car Loan Types?

When talking about traditional loans, the type of car loan does not change how your payments are calculated. For example, a new car loan calculator would use the same basic formulas as a used car calculator or a car loan refinance calculator.

That said, when comparing car loans to HP or PCP contracts, each product works in a different way and would require a different method of calculation. For this reason, it can be more difficult to simply compare these products.

What is the difference between car loan calculation and personal loan calculation?

A traditional car loan and a personal loan are subtypes of the same product – unsecured personal loans. As such, calculating the costs of either product is done in the same way, using the same calculation.

There are key differences in the calculation used for hire purchase (HP) and PCP contracts vs traditional car loans.

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