Does a longer term lower my payment?
Yes, stretching the loan over more months lowers your monthly payment, but you will pay significantly more in total interest.
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Calculate your monthly car payment and total interest over the life of your auto loan.
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How auto loan payments are calculated
Auto loans use an amortization formula where your monthly payment stays the same, but the portion going toward interest decreases over time while the portion paying down the principal increases.
Your total loan amount is the car price minus any down payment and trade-in value.
M = P [ r(1 + r)^n ] / [ (1 + r)^n - 1 ] M = Monthly Payment, P = Principal, r = Monthly Interest Rate, n = Number of Months
Frequently asked questions
Should I put zero down?
A zero-down loan increases your monthly payment and total interest. It also increases the risk of being 'underwater' (owing more than the car is worth) early in the loan.