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Estimating Your Monthly Car Payment

Shopping for a new vehicle can be stressful, especially when it comes time to calculate car payments. But with the right tools, you can simplify your car-buying process. By using an auto payment calculator, you can generate an accurate estimate for your car loan to see whether a potential purchase falls within your budget.

While some calculators can be complicated to use, Capital One Auto Loan Calculator is straightforward, requiring just three key pieces of information: loan amount, term length, and annual percentage rate (APR).

Your loan amount could either be the cost of your car or the amount you anticipate needing to borrow. Since you may plan on contributing a down payment or trading in a vehicle to lower the overall cost of the purchase, consider what your loan amount will be after these additional contributions toward your vehicle purchase.

Depending on the length of your car loan, your monthly payment may increase or decrease. You can choose loan terms of 36, 48, 60, or 72 months to see how your monthly payment changes if your other variables stay the same. But keep in mind that while longer loan terms may have lower monthly payments, they also typically come with a higher interest rate. This means you could end up owing more over the lifetime of your loan, even as your vehicle depreciates.

Determining your APR will likely depend on your credit score, national rates, and other industry factors. You could get pre-qualified for a loan and receive an APR to calculate your monthly payment. Once you have an estimated APR, you can enter it into the auto payment calculator and see how it might affect your monthly payments.

Using these key pieces of car loan information, you can generate as many estimates as you need to inform your car-financing decision. Whether you're buying a new car or refinancing your current vehicle, using a monthly payment calculator can help you get a clearer picture of how your anticipated costs align with your budget.

What is Auto Loan Interest?

Auto loan interest is the extra cost in addition to your loan principal — your starting loan amount — that lenders charge you for borrowing money. Your interest rate is calculated as a percentage of your remaining balance of debt. Each month when you make your payment, a portion will go toward paying down your principal, while the remainder goes toward accrued interest. Once your interest rate is determined and laid out in your loan terms, your lender will calculate your interest and add it to your monthly payments.

Your auto lender will most likely use simple interest to calculate your monthly rate. This means interest will be calculated based on the remaining car-loan balance when your monthly payment is due. Simple-interest car loans front-load your monthly interest payments, meaning you pay more toward interest at the beginning of your loan and more toward your balance at the end. Since interest is determined by your remaining monthly balance, the more you can pay toward your auto loan per month, the less interest you will pay over time. A monthly payment calculator will typically estimate your car payment using simple interest.

Auto Loan Tips

Checking your credit score can help you gauge your loan approval chances. Understanding your credit history and current credit score may help you make a more informed decision on your auto loan. Credit scores are a key factor when lenders are deciding whether or not to finance your car purchase, and often will determine your car loan interest rates and acceptance. Checking your credit before applying for a car loan may help you resolve any discrepancies and put you in a better position for approval.

Making a down payment could lead to long-term savings. Saving up for a down payment may reduce the overall costs of your auto loan. Down payments not only help lower your monthly payments, they could also reduce your total auto loan interest. Most experts recommend a 20% down payment for new cars and 10% for used.

Getting pre-approval might provide clarity on potential interest rates. Pre-approved auto loans can provide insight into the potential interest rate your lender will be able to offer. If the estimate doesn't match your budget, you have the option to look for financing options elsewhere. However, keep in mind that pre-approval often requires a hard credit check that could impact your credit score if you don't make a financing decision quickly.

Shopping around for car loans could lead to savings. Shopping for car loans could potentially hurt your credit through multiple hard credit pulls, but taking advantage of rate-shopping windows could help you get the information you need with minimal impact on your credit. Credit scoring companies like TransUnion allow car shoppers a 14-day grace period, during which multiple credit checks can count as one. Using this window to get the information you need can help you apply for a loan that best suits your budget.

Frequently asked questions