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Car loan calculator

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Loan amount ($5000 - $75,000)

Loan duration (1 Year - 8 Year)

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*The calculation is based on the information you provide and is for illustrative and general information purposes only. This should not be relied upon as specific financial or other advice.

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Car Loan Calculator

There are several things that may be going through your mind if you’re thinking about buying a car for yourself. Maybe you’re wondering how much the car might cost each month. After all, financing the purchase of an automobile entails making monthly capital and interest payments. You might also be debating whether the convenience of having your own car outweighs the higher cost compared to taking a less expensive form of public transportation.

To figure out how much interest you will pay in total, compute your monthly auto loan installments using a car loan calculator. Before approaching a lender or auto dealership, it will also assist you in determining whether you have the necessary monthly income. Check out our car loan calculator.

Car Loan Calculator - Comparewise

How to use the Car Loan Calculator

The data you must enter into the car loan calculator is outlined in the following tutorial.

Car price

Enter the amount you anticipate spending in this field for the car’s price. You might begin by using the vehicle’s sticker price to estimate new car costs (also called the MSRP). Subtract any discounts obtained through manufacturer or dealer rebates. Afterward, include the price of any optional features as well as the “destination fee” for new cars.

It can be more difficult to estimate the market price of used vehicles. You can begin with the seller’s asking price, but you might be able to get it cheaper through negotiation. Use online pricing resources or search regional online classifieds for comparable cars to get a sense of what is reasonable to pay.

Interest rate

The appropriate interest rate can be determined in a number of ways. You can choose your credit score from the drop-down menu at the top of the car loan calculator to view the average interest rates for auto loans. Check the rates of lenders online as well.

Trade-in and down payment

Indicate the total amount you’re spending on the new automobile, as well as the trade-in value of your current vehicle, if applicable. The amount the dealership will pay you to purchase your current vehicle is known as your trade-in value. The greatest approach to reduce the price of the new car you’re about to buy is usually by trading in your old one.

 For help with pricing and appraisals, you can use online resources. Use a pricing guide, but make sure you look at the trade-in value rather than the retail price (the price at which the dealer sells the car).

The number of months

The length of your loan will determine how long it will take you to make a repayment of your new vehicle loan. The shortest loan durations are 12 months, although the majority are between 36 and 72 months. Your payment may be significantly impacted by the loan duration you select. You have to decide on this probably more than anything else when financing a car. Therefore, experiment with our car loan calculator Canada to determine which term length is most suitable for you.

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How interest on a car loan works

The fee you pay to the bank in return for their lending you money is called interest.

You must pay the entire loan amount coupled with the interest after acquiring a car loan. Keep in mind that until your loan is paid in full, your lender technically owns the vehicle. The auto loan is often repaid in monthly or bimonthly installments. A fraction of the total borrowed amount plus interest is represented by each installment. In comparison to later payments, the initial installments have a higher percentage of the payment allocated to interest.

The total interest charged with each installment decreases as your balance increases. The vehicle is yours once the loan has been fully repaid.

Reasonable Car Loan Rates

For consumers with credit scores in the mid-600s, an interest rate of under 6% is now seen as favorable.

If your credit is great, you can be qualified for loans with interest rates as low as 2% to 3%. On rare occasions, dealerships could run a special campaign that includes a 0% APR auto loan.

If your credit is poor, the interest rates could be more than 10% or 15%. The financing rates on new autos are frequently cheaper than those on used cars.

How auto loan interest rates are determined

The interest rate is arguably the most crucial factor in this calculation. The amount of interest that a lender will charge you for the money they loan you will depend on a number of factors, including:

Credit score

Borrowers who have better credit are usually given reduced interest rates.

Credit history

You are less likely to default if you have a great track record of timely payments and effective debt management. The lower interest rates indicate this.

Loan term

If the lender gives you a loan for a longer length of time, it signifies that they are assuming a greater risk. In all other respects, rates are higher for longer periods of time.

Down payment

Lenders are more likely to accept borrowers who choose to pay a bigger down payment than the required amount.

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Ways by which auto loan interest is calculated

Another thing to keep in mind is that there are two approaches to calculating interest on an auto loan:

  • Due to the fact that interest is only assessed on the balance due, simple interest auto loans give borrowers flexibility. The amount of interest owed by the borrower will be reduced during the course of the loan if they choose to pay off the principal earlier than is necessary.
  • When a car loan’s total interest is predetermined, it means that the amount is known at the time the loan is provided. If the borrower chooses to pay off the principal early in this situation, they will still be required to pay the lender the full amount of interest that was determined at the time the loan was approved.

Why is a car loan calculator important?

The total cost of the car isn’t actually the figure you need to focus on if you’re going to finance your new buy. The payment is the most significant amount to you. Due to the fact that how you build your transaction will determine the final cost, as our car loan calculator will demonstrate.

With the exception of the vehicle’s price, the loan term will have the biggest impact on your monthly payment. The longer your loan is outstanding, the lower your monthly payment will be since you stretch the loan amount over a longer period of time. In reality, though, you’ll wind up paying more for your car by the time your installments are done because of the interest you’ll be paying on your loan. Why? Since interest charges increase in proportion to the length of time it takes you to repay the loan.

Speaking of interest, the second most crucial figure to take into account when constructing a car loan is the interest rate. The proportion of your purchase that is annually added to the cost of your vehicle is known as the interest rate, which is commonly expressed as a number between 0% and 29.99%. In other words, if you finance a car purchase at a rate of 4.99%, the annual interest you pay will be equivalent to about 5% of the total cost of the car.

An car loan calculator is also a good idea, though, if you still owe money on the car you are trading in. This is due to the possibility that your final payment would be higher than you anticipated.

Car Loan Application Checklist

Here are a few pieces of information or documentation you should have on hand when making an application for a car loan to hasten the approval process:

  • Recognize your credit rating: Your credit score should be at least somewhat known to you. Not sure what your credit report or score indicates? Discover for free right here.
  • Employment income information: Have your income documentation on hand. Income from disability payments or pension benefits is also allowed. It is necessary to have a gross monthly income of at least $1,800.
  • A valid driving permit: One of the documents needed to apply for an auto loan is a valid driver’s license.
  • A legitimate residence address in Canada: Your Canadian location or province is another detail to be submitted before you can request a car loan in Canada.
  • Information about your bank account needed to repay the loan
  • Details on the brand and type of the car you wish to buy.

Plans for Repaying Car Loans

In Canada, you can apply for a car loan from a few lenders and dealerships of your choice. The purpose of this financing is to gradually lower the cost of a new or used car through recurrent payments with interest.

This payment schedule can last for several years and, when necessary, be modified to meet your demands. It depends on your financial situation, the lending institution’s policies, and the kind of car you’re interested in. You may usually choose from a variety of payment frequency options from most lenders and dealerships, including monthly, semi-monthly, weekly, and bi-weekly.

Numerous lenders will also permit you to make faster payments, even though the length, frequency, and overall cost of your plan will be decided upon beforehand. This is required so that you can make larger or more regular payments toward your debt, which will help you pay it off faster. Just be certain to read your contract thoroughly because certain lenders may impose a prepayment penalty.

Picking the best lender

You can choose from a variety of sources for auto loans in Canada, as was already mentioned. The lender you choose might have a significant impact on your financial situation, just like the auto loan itself. It’s crucial to conduct preliminary research and contrast local lenders if you want to find the cheapest rates, cars, and loan terms.

Prime Lenders

If your finances are sound, you might choose to submit an application to a reputable lender like a bank or credit union. Prime suppliers typically provide a wider range of lending products, better rates and payment options, and additional financing when necessary.

The usual prime lender, however, can be difficult to qualify with because a car loan necessitates a sizable quantity of funding and entails a sizable risk for them. It might even be a good idea to provide some sort of loan security, like collateral or a cosigner, to boost your application.

Alternative lenders

It might be simpler to apply with an alternative lender, whose approval conditions are less stringent if you have weaker financial standing, poor credit, and little or no money available for a down payment. It could be a privately held business or even one that only serves customers with poor credit.

Your odds of acceptance and the rate you qualify for will depend largely on your income and job situation in any case. There shouldn’t be an issue if you’ve been employed steadily for at least a few months and are making enough money to make your impending payments.

Even borrowers who have just received a discharge from a bankruptcy or consumer proposal may be eligible with some alternative lenders.

However, many subprime lenders demand higher rates as they are taking on customers who theoretically have a larger risk of default. Make sure to include their higher, more significant fees in your budget if you plan to submit an application with a subprime provider.


Additionally, a lot of new and used car retailers have their own financing options. The conditions of your loan will again vary based on where you register and your financial situation, although applying directly through a dealership may have advantages like warranties and in-house repairs. You could even be able to haggle with the salesperson or trade in your current car for a discount.

Benefits of a good credit score

When you apply for a car loan, many lenders will consider your credit score, which goes from 300 to 900 and shows how strong of a credit user you are. If you are accepted, until the day that your final sum is paid in full, your score will change in accordance with how you handle payments.

Good Credit

The 650 to 900 range is preferred by lenders as it denotes “excellent credit” and increases the likelihood that you will pay your loans on time. As a result, you can get a bigger loan with a better interest rate and a more flexible payment schedule. Any subsequent payments you make will raise your score even further and boost your creditworthiness.

Bad Credit

The opposite will occur, though, if you skip a payment or otherwise default. Whatever the cause, having enough missed payments will cause your score to fall into the 300-600 “poor credit” zone. Once you reach here, it’s possible that a subprime lender will only be able to offer you a small loan with a higher interest rate and less negotiation power over your repayment terms.

In general, it’s advised to apply for a car loan with more reasonable terms if your credit score is in the moderate to a reasonable range. The credit score may be anywhere above 600.

Budgeting and Affordability

Remember that applying for a car loan anywhere is a big responsibility. While the majority of lenders can easily change your plan after prior discussion, there won’t be much wiggle room if you frequently fall behind on your payments.

Multiple payment defaults could result in the repossession of your car in addition to harming your finances and credit. Therefore, it’s crucial to again prepare financially. By doing this, you’ll have a better chance of obtaining a favorable loan with a low-interest rate and paying for all related expenses.

Hidden costs

It’s wise to receive a fair price quote from your lender before applying for a car loan because, like other credit products, they may have additional fees beyond your initial payments and interest rate. Additionally, you can ask for all of these expenses to be documented and added to your budget when choosing a lender.

For instance, even while buying a warranty from the dealership may be a good idea, some packages will significantly raise the cost of your car overall.

When to Apply for a Car Loan

While it may be tempting to buy the first car that catches your eye, keep in mind that if you’re not prepared for your payments, they could be quite challenging to manage. Applying can be done at good or bad moments, so knowing when to do it is crucial.

Considering a car loan application should only be done if you:

  • You have looked into financing options for the car: Observed what various types and models sell for, the expense of financing them, and the potential value loss over time.
  • Find a reliable source of financing by evaluating lenders and dealerships in your neighborhood. They must be well-liked by clients, charge fair prices, and hold legitimate professional licenses.
  • Received a fair price estimate: You should feel free to ask any concerns you may have about the fees and rates charged by legitimate lenders and dealerships, and these prices must be disclosed in their contracts.
  • Built up emergency savings, created a budget, and cut back on unnecessary spending: Consider your ability to pay for all costs during your payment schedule, even during a time of reduced income or unemployment, as some vehicles take years of financing.
  • Put money aside for a suitable down payment: Though a down payment isn’t always required, making a sizable one can shorten your debt’s term and increase your eligibility for a favorable loan.
  • Having your own vehicle examined by your mechanic: Despite the possibility of a deposit, it will be worthwhile to forgo purchasing anything dubious or dangerous.

Thanks for checking out our car loan calculator.

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June 29, 2022
Fact Checked

FAQs about our
Car Loan Calculator

Is taking out a 72-month auto loan a wise decision?

Your income and debts will determine this. You’ll pay less interest overall if the loan period is shorter. You still want to have manageable monthly expenses, though.

What can I afford for using an auto loan calculator?

Your ability to borrow money is primarily based on your credit score. You might therefore benefit from using a credit score auto loan calculator. Your borrowing capacity and interest rates will be influenced by your credit score for vehicle loans. The main and most significant element is your credit score, but it may also be influenced by your income and the size of your down payment.

The calculator can be used to estimate the monthly costs associated with a specific car.

How much must I earn to be approved for a car loan?

Your income level is unquestionably significant. It will impact how the credit experts determine your debt to income-ratio. Additionally, it will show you how much you could be able to pay each month. Additionally, it can unquestionably assist with a down payment.

How much money you need to make to qualify for a car loan, however, is not a set requirement. An auto loan rate calculator is really useful for this reason.

How many auto loans can I contract?

Many people have multiple auto loans. Having said that, having a current loan will limit your chances of obtaining a future loan. This is because debt affects your credit score in a negative way. However, if you require more than one car, there is no reason you couldn’t obtain separate loans. For a single car purchase, you cannot obtain more than one loan.

Can I get a car loan even though I have bad credit?

You can obtain an auto loan while having bad credit, yes. You’ll have to show evidence of your income, and you might even have to put up something of value as collateral.

What credit score must I have to qualify for an auto loan?

For the purpose of getting a car loan, no specific credit score is needed. The lender has the last say. Approval for a car loan from a typical bank or credit union should be easy for the majority of purchasers with a score of 660 and enough income.

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