Car Loan Calculator

Ensuring you can afford your next auto loan.

Purchasing a car can be a good reason to take on debt. It helps you get to work and makes it easier to live your life day-to-day. On the other hand, a new loan can create stress on your budget. It’s important to make sure you’ll be able to afford the payments before you sign on the dotted line. This free auto loan calculator can help you do just that.

The calculator offers two ways to evaluate your next car loan.

If you select Purchase Price on the tabs below, the calculator will help you understand the monthly payments based on the total price of the vehicle you wish to purchase.
If you select Target Payments, the calculator will show you the maximum purchase price you can afford based on the amount you wish to pay each month.

Ensuring you get the right terms on your next car loan

Down payment

A down payment reduces the amount of money you need to finance for a vehicle purchase. The more cash you give the dealer upfront, the lower your loan amount will be. It makes your vehicle more affordable.

You want to put as much money as possible down when you purchase a car. While you may need to save up in advance to generate a larger down payment, it will be worth it in the end.

Interest rate

You qualify for an interest rate on a car loan based on your credit score. If you have bad credit, you will only qualify for a loan at higher interest rates. A high credit score helps you get the lowest rates and best terms possible on your loan.

A few percentage points may not seem like much, but it can significantly increase the cost of borrowing. You can use our credit score loan cost calculator to see how much your credit score impacts the cost of a 7-year car loan.

Term

The term of a loan is the number of months you have to pay off the balance with interest charges. Auto loans tend to range from 12 months all the way up to 84 months (7 years).

In general, you want to choose the shortest term possible that has monthly payments you can comfortably afford. A longer-term will increase your total costs, even though it decreases the monthly payments. A lower payment may seem like a great idea, but you’ll end up paying more overall for your purchase.

Car buying tips

You can shop around for loans without damaging your credit score

Normally, too many hard inquiries on your credit report will hurt your credit score. Inquiries happen when you authorize a lender to check your credit. You generally want to avoid too many inquiries within a short time or it can decrease your score.

However, if you’re shopping around for a specific type of loan (including a car loan) then multiple inquiries get grouped and counted as one. This allows you to shop around for the best loan possible. You can apply for multiple loans to compare the rates and terms to choose the right loan for your needs.

Generally, you need to shop quickly. Usually, inquiries for a specific loan type will only be grouped for 14 to 45 days.^[1]

Get pre-approved before you start to shop for a car

You can go to your bank or preferred lender to get pre-approved for an auto loan. The lender will tell you the maximum loan amount you qualify for based on your credit score. You can even receive multiple pre-approvals from different lenders to help you find the best deal.

Getting pre-approved before you shop helps you narrow your search for a new vehicle. You won’t run the risk of falling in love with a car you can’t afford because you already know what you can afford.

Always compare dealership offers to your pre-approved traditional loan

Many dealers offer specialized incentives to get car buyers to come in for a test drive. You may see advertisements for zero percent interest, no down payment, or cashback on your purchase. On the surface, these sound like great deals.

However, many dealership-offers end up increasing either the monthly or total cost of purchasing a car (or both). This is another reason that having a pre-approval can be beneficial. You can compare the offers the dealer gives you with a traditional car loan. You can evaluate if something that looks like a great offer really is great for you.

Take steps to improve your credit score as much as possible before you apply

Ideally, you want to take about six months to improve your credit score before you apply for a loan. This will help ensure you get the lowest interest rate and best terms possible.

This includes:

Reviewing your credit report to make sure there aren’t going to be any unwelcome surprises when the lender runs your credit.
Disputing any negative items that may be mistaken, which could be damaging your score, so you have the highest score possible when you apply.
Paying down credit card debt, so high balances don’t hurt your score.

If you have high credit card balances that you need to pay off, we can help. Talk to a trained credit counsellor today.

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