Quick Payment and Interest Calculations for Car Buying

Quick Payment and Interest Calculations for Car Buying

Knowing Your Payments Helps You Negotiate

Are you ready to buy a car?  Great, there are many things you must have ready before you go to the dealer.  One of the most important is a way to calculate approximate payments.

Calculating payments is based on three factors:

  1. Your interest rate
  2. The amount you need to finance
  3. The length of the term

You should know the answers to those before you go the dealer to negotiate your new car.  

For Item 1 – Your Interest Rate:

To understand the approximate interest rate you will be going after depends largely on your credit score and the specials a car manufacturer is offering.  To get your credit score, you can use any of the free credit check sites or one that I use is credit karma.

Next, check the dealer sites to see what special financing they are offering.  You can also check sites like edmunds.com and cars.com.

Once you have the needed information, you can approximate the rate you may get based on your credit score and the specials being offered.  To get the specials, you typically have to be in the 600’s and ideally in the 700’s.  If you are not, your rate will be higher than the special.

Also, for leases, they do not use interest.  You have to research (MF) money factor.  If you want to approximate the percentage rate multiply the lease factor by 6,400.

For Item 2 – Amount to be Financed: 

Know the price of the car you want to buy, add in taxes and fees, subtract the amount of money you want to put down.  That is it, that number will be the approximate amount you will be financing.  People often forget about the taxes and fees which can add $5-10 per month on your payment.

For Item 3 – Length of term you want:

Depending on a lease or purchase, you should know the length you want and how it impacts your payment.  Leases are best around 3-years, purchasing depends a lot on the specials if there are no specials that shorter terms will cost you less in the long run.

Put it all together:

One thing I highly recommend is to know various combinations of terms/interest/ and financed amounts.  This allows you to easily keep up with the dealers if they offer you different options, change prices, or simply through a lot of information at you.

If you are going to lease, then please read this post hereIt is so important to know the different factors in leasing to get the best deal. 

One very simple way to know if you deal is on par with a normal purchase is to tally up the total cost over the term (total lease payments + down payment + fees + residual) and compare that to the total cost of the car through standard financing (total payments + fees + down payment).  They should be similiar, if one is way higher then something is off.

It is so easy to get a bad deal by leasing, PLEASE do your homework if you plan to lease.  A low payment on a lease does not mean a good deal.  Check this example here for how a bad deal looks.

Take All Your Homework And Make A Quick Reference to Take to the Dealer

Now that you have the information and have made different calculations, I highly suggest you put those in a cheat sheet and take them to the dealer.  This will help you during negotiating and is a bit easier than trying to use some app while numbers are being shouted out to you.

To get you started, I have made some very quick reference tables based on common financing terms and interest rate offers.  Take this list and customize it to your needs:

Low APR financing monthly payment per $1,000 financed:

72-months 0% APR – $13.89 per $1,000 financed.
60-months 0% APR – $16.67 per $1,000 financed.
48-months 0% APR – $20.83 per $1,000 financed.
36-months 0% APR – $27.78 per $1,000 financed.

72-months 1.9% APR – $14.71 per $1,000 financed.
60-months 1.9% APR – $17.48 per $1,000 financed.
48-months 1.9% APR – $21.65 per $1,000 financed.
36-months 1.9% APR – $28.60 per $1,000 financed.

72-months 2.9% APR – $15.15 per $1,000 financed.
60-months 2.9% APR – $17.92 per $1,000 financed.
48-months 2.9% APR – $22.09 per $1,000 financed.
36-months 2.9% APR – $29.04 per $1,000 financed.

72-months 3.9% APR – $15.60 per $1,000 financed.
60-months 3.9% APR – $18.37 per $1,000 financed.
48-months 3.9% APR – $22.53 per $1,000 financed.
36-months 3.9% APR – $29.48 per $1,000 financed.

Or you can use this format:

24 36 48 60 72
0%  $  41.67  $  27.78  $  20.83  $  16.67  $  13.89
1%  $  42.10  $  28.21  $  21.26  $  17.09  $  14.32
2%  $  42.54  $  28.64  $  21.70  $  17.53  $  14.75
3%  $  42.98  $  29.08  $  22.13  $  17.97  $  15.19
4%  $  43.42  $  29.52  $  22.58  $  18.42  $  15.65
5%  $  43.87  $  29.97  $  23.03  $  18.87  $  16.10
6%  $  44.32  $  30.42  $  23.49  $  19.33  $  16.57
7%  $  44.77  $  30.88  $  23.95  $  19.80  $  17.05
8%  $  45.23  $  31.34  $  24.41  $  20.28  $  17.53
9%  $  45.68  $  31.80  $  24.89  $  20.76  $  18.03
10%  $  46.14  $  32.27  $  25.36  $  21.25  $  18.53
12%  $  47.07  $  33.21  $  26.33  $  22.24  $  19.55
15%  $  48.48  $  34.66  $  27.83  $  23.78  $  21.14
20%  $  50.89  $  37.16  $  30.43  $  26.49  $  23.95

Want a handy graphic to print out?  Visit this post to get a printable quick reference table.

Total interest paid per $1,000 borrowed:

72-months 3.9% APR – $123.18 per $1,000 financed.
60-months 3.9% APR – $102.29 per $1,000 financed.
48-months 3.9% APR – $81.65 per $1,000 financed.
36-months 3.9% APR – $61.26 per $1,000 financed.

72-months 2.9% APR – $90.73 per $1,000 financed.
60-months 2.9% APR – $75.46 per $1,000 financed.
48-months 2.9% APR – $60.33 per $1,000 financed.
36-months 2.9% APR – $45.34 per $1,000 financed.

72-months 1.9% APR – $58.87 per $1,000 financed.
60-months 1.9% APR – $49.04 per $1,000 financed.
48-months 1.9% APR – $39.27 per $1,000 financed.
36-months 1.9% APR – $29.56 per $1,000 financed.

Here is a sample of how you would use it:

If your car costs $20,000 and you received 3.9% APR for 72-months you will have paid $2,463.60 in interest ($123.18 * 20).

Another Quick note on leases

Now that you know the total interest paid on the special financing terms if you decide to lease on the spot without doing your homework at least do this quick check before you sign any papers.

Multiply your total payments.
Add your down payment. (Should be zero or very small)
Add your trade-in allowance.
Add any rebates and incentives.
Add in the residual value of the car. (Should be as high as possible)

This is your total price of the car. Does it make sense? Is it high compared to traditional financing? If you are doing a 36-month lease, look at what your total cost of the car would be using traditional financing using the charts above. For a car that costs $20,000 financed at 3.9% for 36 months you will pay a total of $21,225.26 (before taxes and fees). If you do your calculation above for your lease and it turns out to be $25,550, you know you have a terrible deal.

Word of warning here. Just because the numbers match the good financing does not mean you have a good deal. If you are at the dealer and reading this and you don’t know why then take the information down and tell the dealer you will call them with your acceptance within 24 hours. Go home and walk through the calculations on this site and determine if your lease meets the proper factors for being a good deal.

If you are arithmetically challenged, post the information in the discussion board or on any other car buying discussion board and wait for responses.

Never rush a lease unless you are already familiar with each factor before you go into the dealer.

Good luck!



  1. ReplyMissy

    Can you add to this page the 0.9% monthly payments. I use this grid as a resource. thanks! going thru your site, enjoy what you have provided.

    Is this still a current updated site?

    1. Author


      72-months 0.9% APR – $14.27 per $1,000 financed.
      60-months 0.9% APR – $17.05 per $1,000 financed.
      48-months 0.9% APR – $21.22 per $1,000 financed.
      36-months 0.9% APR – $28.16 per $1,000 financed.

    2. ReplyCynthia Navarra

      Would it be better to take the manufacturer’s rebate of $2,000, but pay 3.04% interest or pay $2,000 more for the car and pay 0.9% interest?

  2. ReplyJenni

    Thank you so much for your hard work in posting this for us car buying “dummies”!!! I am in my mid 30’s, but have bought many cars. And from the time I was 19 until now, things have NOT changed. IT is still hard to believe the dealer is giving you a good deal. Meaning, I am not getting gouged, lol. We all have to make money, I wish they did it so everyone felt good about the first deal. At least you give us a great tool to use to take some of this hassle out. Thank you!!!

  3. ReplyKayla

    I want to buy a car that cost 21,000 I want a 36 month loan, and the dealership gave me two options
    Option A: $1,000 cash back and 4.5% APR
    Option B: 0.9% APR
    I have 2,000 for a down payment, but I want to know my best choice. I need to pay the Maryland title tax which is 6%, but I don’t need to consider the fees for license plates.
    -What would be the monthly payment for each option( considering down payment and taxes)?
    – How much interest will I pay over the entire duration of the loan, saying I pay the exact monthly payment on time each month, for both options?
    – How much in total, Including interest, down payment and taxes, Will I have paid for the car at the end of the loan for each option?

    1. Author

      Hi Kayla,
      There are a lot of factors in your question since there may be other fees not mentioned, but lets take a look at just the basic question. Is option A or Option B better? First you must determine the full cost of the car which in your example is $21,000+6%*21000=$22,260

      Next figure out the total financed for each option (assumes you apply the cash back as a down payment):
      Option A: $22,260 – $1,000 – $2,000 = $19,260
      Option B: $22,260 – $ 2,000 = $20,260

      Now you can use any loan schedule calculator to figure your monthly payment and interest. I typically use bankrate or edmunds or just google car loan calculator.
      Option A @ 4.5% interest: payment = $572.93 total interest $1,365.33
      Option B @ .9% interest: payment = $542.46 total interest $268.40

      Option B is clearly the better choice based on the limited details. In fact, it is almost always better to go with the low interest rate option as banks will almost never give a bigger rebate than the savings on interest.

      Remember, there are lots of factors that can change the results and every circumstance is different. There are thousands of tools to use, lots of resources at your local banks, and for certainty you can always talk to a certified financial planner. Good Luck, you are doing the right thing by asking the questions above.

  4. ReplyGina

    Help please!! I’m going back to talk to the dealership tomorrow. I was looking to get a 2015 honda civic 4Dr sedan se. The price tag on the car is 20,000. They want 406 per month for 72 months @ 9% interest rate (I HAVE BAD CREDIT) my mom made it 9% if she cosigns, where as BY MY SELF the interest rate would 28%!!…what do I tell the car salesman?? I was hoping 350 for 60 months would make more sense. But honestly I don’t know how interest rates work and how it makes the car total price go up? What’s the max price I should get this car for with 9% interest? Thanks in advance!

    1. Author

      Hello Gina,
      That rate seems high, 9% at 72 Months should be around $360 before taxes and any other fees. The best thing I would suggest is to not buy the car today until you have the necessary facts. First, go to a site like cars direct and price out your exact model and color. They should give you a much better price than the dealer and they will be transparent with the fees. At that point you have two options, if the price is lower you can choose to buy through them or you can take the offer back to the dealer and buy from them. As far as interest rates, don’t worry how they work, just use a site like bankrate loan calculator to estimate how much you payment would be. You just need the amount financed (total car price – amount put down – rebates + taxes). They make a mobile app that you can use at the dealer to check rates as you price out the car.

      With poor credit, I highly suggest not buying a new car and one that is two or three years old. The reason is that you will get a far better deal and cars last a lot longer these days. In addition, you will have a lower monthly payment and will be able to establish credit more easily.

      Good luck, FBV

  5. ReplySuzanne


    I want to buy a new 2015 Mitsubishi Outlander Sport. I do believe I could qualify for the 0% interest for 72 months offer. This part stood out to me, “72 monthly payments of $13.89 per $1,000 financed at 0.0% APR”. Could you explain this to me? This means that I still will pay interest on the car for every $1000 I finance. I am expecting to finance about $23,00 so is this not the best deal?

    1. Author

      Hello, that sounds like you have a great deal. 0% financing for 72 months is wonderful as it means you will not be paying any interest on the loan and basically receiving a free loan. The math on this is real simple, divide your all in price (car price, tax, other fees) and divide by 72. That will be your payment! Great job finding a good deal. The $13.89 per $1,000 is just another way to break down the payments so that you can budget (i.e. a $1,000 car would cost $13.89 per month and a $10,000 car would cost $138.90 per month). Just divide by 72 and you will get the exact number if you don’t understand the $13.89. Good luck.

  6. ReplyLon

    I read this piece of writing completely about the difference of most recent and preceding technologies, it’s amazing article.

  7. ReplyIan Badawi

    Great info all in one place. Thanks so much!
    But I’m wondering, if it’s 0% APR, why would you still have to pay financing cost?
    72-months 0% APR – $13.89 per $1,000 financed.
    60-months 0% APR – $16.67 per $1,000 financed.
    48-months 0% APR – $20.83 per $1,000 financed.
    36-months 0% APR – $27.78 per $1,000 financed.

    Is this basically just an extra profit on the car price for selling it on credit/installments instead of cash price?

  8. Replykal

    Hi, need an advice
    In May 2015, I leased a 2015 Toyota Corolla S for 1000 down with 180 a month. I am coming to the end of my lease what is a good thing to do buy it, can I extend the lease or go for a new lease, I cannot afford more than this payment these days for financial issues while in fact, my credit score is in the 800.
    The car mileage is 45000 miles, the car still in excellent shape, body, all service were at the dealer.

    1. Author

      Typically you can not extend a lease but I don’t want to say it is not possible as the banks always have new products. Your best bet is to buy the car and finance the residual for as long as you can to make your payment low. If that does not get you to a payment you can afford, then work with the dealer to see if there is any other car you could afford. They don’t want to lose you as a customer, just make sure to run the numbers so that you get the best deal. Good Luck.

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