Financing $40,000 for a car at 6% APR over 60 months costs about $773.31 a month and $6,399 in interest. If you put $5,000 down and finance $35,000 instead, the payment falls to $676.65 and interest to $5,599.
$40,000 car payment by APR and term
| APR | 48 months | 60 months | 72 months | 84 months |
|---|---|---|---|---|
| 4% | $903.16 | $736.66 | $625.81 | $546.75 |
| 6% | $939.40 | $773.31 | $662.92 | $584.34 |
| 8% | $976.52 | $811.06 | $701.33 | $623.45 |
| 10% | $1,014.50 | $849.88 | $741.03 | $664.05 |
Why term length matters
Long loans keep the balance outstanding longer, so you pay more interest and risk owing more than the car is worth early in the loan. At 6%, the 84-month payment is $584.34 against $773.31 at 60 months, but total interest is $9,085 versus $6,399.
Total cost of owning the car
The loan payment is only part of the cost. Budget for insurance, fuel or charging, registration, maintenance and depreciation. Also check sales tax and dealer fees, which may be added to the financed amount. Our auto loan total cost guide walks through these.
Enter your own price, trade-in, down payment, APR and term in the Auto Loan Calculator.
Worked example: down payment and trade-in
Say the $40,000 price includes taxes and fees, you put $5,000 down and trade in a vehicle worth $3,000. You would finance $32,000. At 6% over 60 months that is about $618.65 a month, compared with $773.31 financing the full $40,000. Be sure the trade-in value is quoted separately from the new price so each number can be negotiated and verified.
How much car should your budget carry?
A commonly cited guideline is to keep total vehicle costs, including loan, insurance and fuel, within roughly 10 to 15 percent of take-home pay. It is a rule of thumb, not a requirement, but it helps avoid a payment that crowds out saving. Estimate take-home pay with the Salary Calculator.
Questions to ask the dealer or lender
- Is the APR fixed, and is there a prepayment penalty?
- Which fees are being financed (documentation, add-ons, extended warranty)?
- What is the out-the-door price before financing?
- Is a credit union or bank pre-approval available for comparison?
Calculate your own car payment
Common questions
What is the monthly payment on a $40,000 car?
At 6% APR over 60 months with nothing down, about $773.31 per month.
How much does a down payment reduce the payment?
A $5,000 down payment lowers the 60-month, 6% payment from $773.31 to $676.65.
Is a longer car loan a bad idea?
Longer terms lower the payment but raise total interest and the risk of negative equity. Choose the shortest term that fits your budget.