Car Loan Payment Formula
Monthly Payment = Loan × [r(1+r)^n] / [(1+r)^n − 1]
Where r = monthly interest rate and n = number of months.
Average Auto Loan Rates
| Credit Score | New Car | Used Car |
|---|---|---|
| 750+ (Excellent) | 4.5% - 5.5% | 5.5% - 7% |
| 700-749 (Good) | 5.5% - 7% | 7% - 9% |
| 650-699 (Fair) | 7% - 10% | 9% - 13% |
| Below 650 (Poor) | 10% - 15%+ | 13% - 20%+ |
Frequently Asked Questions
What loan term should I choose?
Shorter terms (36-48 months) mean higher payments but less interest. Longer terms (72-84 months) lower payments but cost significantly more in interest and risk being upside-down on the loan.
How much should I put down on a car?
Financial experts recommend at least 20% for new cars and 10% for used cars. A larger down payment reduces your loan amount, monthly payment, and total interest while protecting against negative equity.