David is a Chartered Financial Analyst with over 15 years of experience in auto finance and vehicle loan structures, helping consumers understand the true cost of borrowing.
This 4-in-1 Car Loan Interest calculator helps you see the real cost of your auto loan. Enter any three variables—Loan Amount, Annual Rate, Loan Term, or Total Interest Paid—and we will solve for the fourth.
Car Loan Interest Calculator
Car Loan Interest Formulas
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Then, find Total Interest (I):
I = (M * n) – P
Solve for Loan Amount (P) (given I, R, T):
P = I / ( ( (i * (1+i)^n) / ((1+i)^n – 1) ) * n – 1 )
*Solving for Rate (R) or Term (T) from Total Interest (I) requires iteration.*
Formula Variables
- (I) Total Interest Paid: The total amount of interest paid over the entire life of the car loan.
- (P) Loan Amount: The total principal amount borrowed for the vehicle.
- (R) Annual Rate: The annual interest rate for the loan.
- (T) Loan Term: The length of the loan, in years.
- (M) Monthly Payment: The monthly principal and interest payment.
- (i) Monthly Interest Rate: R / 12 / 100
- (n) Number of Payments: T * 12
Related Calculators
- Auto Loan Calculator
- New Car Loan Calculator
- Used Car Loan Calculator
- Auto Loan Refinance Calculator
What is Total Car Loan Interest?
The total interest on a car loan is the full amount you pay to the lender *in addition* to the amount you borrowed (the principal). It represents the true cost of financing your vehicle. When you make monthly payments, a portion covers the principal, and the rest covers the interest.
This cost is primarily determined by three factors: the loan amount, the annual interest rate (APR), and the loan term. A higher interest rate or a longer loan term will always result in you paying more total interest. For example, a 5-year (60-month) loan will have lower monthly payments than a 3-year (36-month) loan for the same car, but you will pay significantly more interest over those five years.
Understanding the total interest is crucial for comparing different loan offers. A loan with a slightly lower monthly payment might seem better, but if its term is longer, it could cost you thousands more in the long run.
How to Calculate Total Car Loan Interest (Example)
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Identify Your Loan Variables
Let’s say you get a $30,000 loan (P) at a 7% annual rate (R) for 5 years (T).
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Find the Monthly Payment (M)
First, find the monthly rate (i) = 7% / 12 / 100 = 0.005833.
Next, find the number of payments (n) = 5 years * 12 = 60.
Using the amortization formula: M = $30,000 [ 0.005833 * (1.005833)^60 ] / [ (1.005833)^60 – 1 ]
Your monthly payment (M) would be $594.13. -
Calculate Total Amount Paid
Multiply your monthly payment by the total number of payments:
$594.13 * 60 = $35,647.80 -
Find the Total Interest (I)
Subtract the original loan principal from the total amount paid:
I = $35,647.80 - $30,000I = $5,647.80
This is the total cost of your car loan.
Frequently Asked Questions (FAQ)
How can I find the interest rate if I know the total interest I paid?Yes. If you enter the Loan Amount, Loan Term, and the Total Interest you paid (or expect to pay), this calculator will solve for the Annual Rate (R). This is useful for analyzing a loan offer where the total interest cost is disclosed.
What’s more important, a low monthly payment or low total interest?It depends on your financial goals. A low monthly payment is better for your short-term cash flow, but it often means a longer loan term and paying more total interest. Low total interest is better for your long-term wealth (you pay less overall), but it requires a higher monthly payment or a shorter term.
Can I find the loan term if I know the total interest?Yes. By entering the Loan Amount, Annual Rate, and the Total Interest you are willing to pay, the calculator can solve for the Loan Term (T). This shows you how long you would need to make payments to meet that interest goal.
How does the loan term (in years) affect my total interest?A longer term (e.g., 6 or 7 years) dramatically increases the total interest paid, even if the interest rate is the same. This is because interest is calculated on the outstanding balance each month for a longer period. Always aim for the shortest loan term that you can comfortably afford.