Auto Loan & Refinance Calculator
Calculate precise monthly car payments with trade-in negative equity rollovers, sales tax credits, and dealer fees. Or model auto loan refinancing to slash interest and lower monthly payments.
Month-by-Month Amortization Schedule
Auto Loan Purchase Schedule (60 Months @ 6.5% APR)
| Period | Monthly Payment | Principal Paid | Interest Paid | Remaining Balance | Cum. Principal | Cum. Interest |
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Car Loan & Refinance Frequently Asked Questions
Clear explanations of simple interest compounding, underwater trade-ins, and refinancing economics.
How is monthly car loan interest calculated in the US?
Most modern US auto lenders calculate interest using simple interest amortization.
Under simple interest, finance charges accrue daily based on your outstanding principal balance:
Daily Interest = (Principal Balance × APR) / 365.
When you submit your fixed monthly payment, your money first pays off the exact interest accrued over the preceding billing cycle (typically 30 or 31 days). The entire remaining payment reduces your principal balance. Making extra payments or paying ahead directly slashes your principal balance, reducing future interest charges and shortening your loan term without early payoff penalties.
What does it mean to have negative equity (being "underwater") on a car loan trade-in?
Having negative equity—often called being "underwater" or "upside-down"—means the current payoff balance owed on your existing auto loan exceeds the vehicle's fair market trade-in value.
For example, if your lender payoff statement is $18,000 but a dealer offers $15,000 for the car, you have $3,000 of negative equity. If you trade in this vehicle, dealerships typically allow you to "roll over" that $3,000 deficit into your new car loan. This increases your new loan principal, pushes your loan-to-value (LTV) ratio higher, and causes you to pay interest on debt from a vehicle you no longer own.
When does refinancing an auto loan make financial sense?
Refinancing an auto loan makes sense under several distinct financial circumstances:
- Your Credit Score Has Improved: If your credit tier improved since buying the car, refinancing through a credit union or bank can lower your APR by 1.5% to 3%+, saving hundreds in finance charges.
- Interest Rates Have Dropped: Macroeconomic rate cuts can provide refinancing opportunities across vehicle loans.
- Shortening the Loan Term: If your cash flow permits, refinancing from a 60-month loan into a 36-month loan at a lower APR pays off the car faster and eliminates significant interest.
- Lowering Monthly Payments for Cash Flow: If you need immediate breathing room, extending the remaining term at a competitive APR reduces your required monthly outlay.