Before you fall in love with a car, know what it actually costs. Enter the vehicle price, your down payment, rate, and income — this calculator shows your monthly payment, total interest, and whether this car fits your budget using the 20/4/10 affordability rule used by financial advisors nationwide.
The car affordability rule — 20% down, 4yr max term, 10% of income
See payment across all 6 term options simultaneously
Enter your income — get instant budget verdict
See full vehicle cost including all interest paid
Financial advisors use this simple rule to determine whether a car purchase is genuinely affordable:
Dealers love long terms because they let them sell more expensive cars while keeping the payment "low." On a $25,000 car at 12% APR: 48-month payment = $658/mo, total interest = $5,584. 84-month payment = $428/mo, total interest = $10,952. The "lower" payment costs you $5,368 more. The calculator above shows all terms at once — see for yourself.
| Credit Score | Tier | Typical New APR | Typical Used APR |
|---|---|---|---|
| 720+ | Super Prime | ~5% | ~6.5% |
| 660–719 | Prime | ~7% | ~9% |
| 620–659 | Near Prime | ~10% | ~14% |
| 580–619 | Subprime | ~15% | ~20% |
| 300–579 | Deep Subprime | ~21% | ~29% |
Credit unions offer rates 1%–4% below dealership financing on average. Apply before visiting any dealer — bring your approval letter as a negotiating tool.
Multiple auto loan inquiries within a 14-day window (some scoring models use 45 days) count as a single inquiry. Pre-qualify with 3–5 lenders for free to find the lowest rate.
More down = lower financed amount = lower rate risk for the lender. Some lenders offer better rates with 20%+ down, especially for subprime borrowers.
A co-signer with strong credit can unlock significantly lower rates — sometimes dropping from 20%+ to 10% or below on subprime applications.
Using the 10% income rule: maximum total car costs (payment + insurance + gas) = $350/month. Assuming $100–$150 for insurance and gas, your car payment should stay around $200–$250/month. At 10% APR for 48 months, that supports a financed amount of approximately $8,000–$10,000.
20% down payment minimum, 4-year (48-month) maximum loan term, and total car costs not exceeding 10% of gross monthly income. This rule prevents the most common car buying mistakes: no equity at purchase, excessive interest from long terms, and overextending your monthly budget.
Long terms lower monthly payments but dramatically increase total interest and leave you underwater (owing more than the car is worth) for years. On a $20,000 car at 12% APR: 48 months = $527/month and $5,280 total interest. 84 months = $342/month but $8,728 in total interest — $3,448 more for the 'lower' payment.
You can get a car loan with any credit score, but rates vary dramatically. Super prime (720+) gets rates near 5%. Deep subprime (below 580) may face rates of 21%–29%. Even a 40-point score improvement before applying can save $2,000–$5,000 in total interest on a typical auto loan.
Pre-approve at your bank or credit union first — always. Credit unions are typically cheapest. Bring your pre-approval to the dealer; if they want your financing business, they must beat it. Dealer financing can sometimes offer manufacturer incentive rates (0%–3%) on new cars that beat bank rates — compare directly.
Our complete guide covers every auto lender for bad credit — including no-down-payment and 500 score options.
Bad Credit Car Loans →Full deal calculator with trade-in and tax
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⚠ Disclaimer: Rate data is approximate and for illustrative purposes. Actual auto loan rates vary by lender, state, vehicle age, and your full credit profile. Not financial advice. See our Disclaimer and Privacy Policy.