Updated June 17, 2026
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Monthly Payment = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate / 12), and n is the number of monthly payments.
Worked example: $30,000 loan at 7% for 60 months
P = $30,000
Annual rate = 7%, monthly rate r = 0.07/12 = 0.005833
n = 60 months
(1+r)^n = (1.005833)^60 = 1.4176
Payment = 30,000 x (0.005833 x 1.4176) / (1.4176 - 1)
= 30,000 x 0.008268 / 0.4176
= 30,000 x 0.01980 = $594/month (approx)
What is the monthly payment on a $30,000 car loan?
At 7% for 60 months: approximately $594/month. At 5% for 60 months: approximately $566/month. A shorter term of 48 months at 7% raises the payment to about $718/month but saves significant interest overall.
What is the average monthly payment on a $40,000 vehicle?
At 7% for 60 months: approximately $792/month. At 7% for 72 months: approximately $675/month (more total interest paid). Add taxes, title, and fees to the loan amount to find your real financed amount.
What is the 50/30/20 rule for car payments?
This is not a specific car rule but a general budget rule: 50% of take-home pay to needs (which includes a car), 30% to wants, 20% to savings/debt. Car payments typically fall in the "needs" category but should not crowd out the other buckets. See also how much car can I afford for income-based guidelines.
Skip the math: use the calculator
The Car Payment Calculator handles the formula instantly, including tax, trade-in, down payment, and dealer fees. Enter your numbers and see the exact monthly figure.
Try the Car Payment Calculator
Enter your price, down payment, trade-in, tax rate, and loan term to see your exact monthly payment before you visit the lot.