Monthly payment on $40,000 by rate and term
| APR | 36 mo | 48 mo | 60 mo | 72 mo | 84 mo |
|---|---|---|---|---|---|
| 3% | $1,163.25 | $885.37 | $718.75 | $607.75 | $528.53 |
| 4% | $1,180.96 | $903.16 | $736.66 | $625.81 | $546.75 |
| 5% | $1,198.84 | $921.17 | $754.85 | $644.20 | $565.36 |
| 6% | $1,216.88 | $939.40 | $773.31 | $662.92 | $584.34 |
| 7% | $1,235.08 | $957.85 | $792.05 | $681.96 | $603.71 |
| 8% | $1,253.45 | $976.52 | $811.06 | $701.33 | $623.45 |
| 9% | $1,271.99 | $995.40 | $830.33 | $721.02 | $643.56 |
| 10% | $1,290.69 | $1,014.50 | $849.88 | $741.03 | $664.05 |
| 12% | $1,328.57 | $1,053.35 | $889.78 | $782.01 | $706.11 |
| 15% | $1,386.61 | $1,113.23 | $951.60 | $845.80 | $771.87 |
| 18% | $1,446.10 | $1,175.00 | $1,015.74 | $912.31 | $840.71 |
Your rate depends on your credit score, whether the car is new or used, and the lender. Credit unions and pre-approval usually beat dealer financing.
Longer loans cost more
At 7%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months (3 years) | $1,235.08 | $4,463 |
| 48 months (4 years) | $957.85 | $5,977 |
| 60 months (5 years) | $792.05 | $7,523 |
| 72 months (6 years) | $681.96 | $9,101 |
| 84 months (7 years) | $603.71 | $10,711 |
Stretching to 84 months lowers the payment by $188.34 a month versus 60, but adds $3,189 of interest, and you can owe more than the car is worth for years.
The formula
Payment = Loan × r ÷ (1 − (1 + r)^−n) r = APR ÷ 12, n = months
For $40,000 at 7% over 60 months: r = 0.005833 and the payment is $792.05. A $40,000 loan is the price plus taxes and fees, minus your down payment and trade-in.