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Used car loan calculator

Used car loan calculator online in 2022: assessment of the best used car loan in Canada

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Fill out an application for a used car loan online!
Fill out an application for a used car loan online!

Take advantage of our used car loan selection system with a free credit rating check!

What is a used car loan?

Buying a new car is notorious for being a major expense for most people. Thus, a vehicle price can be a headache. If you don’t have sufficient money to purchase a car right now, then getting a loan can be a good option. However, making payments for a car loan still might be an issue for you. No secret, new cars are more expensive than their used counterparts; that’s why total loan amount and monthly payments will be lower for a used vehicle. In fact, as of the beginning of 2022, the median retail price for a used vehicle sat at $36,927. Meanwhile, new vehicles came in at $51,812, according to data compiled in the Auto Trader price index. That is, by buying a used car, you can save up to $20,000. The a substantial price difference between a new car and a comparable used one allure. You can take advantage of that difference by buying a used car.

With the average used car costing far more than $30,000, most buyers have to take out an auto loan to afford the purchase. This kind of banking tool is known as a used car loan. A used car loan is intended for a used car purchase. If getting a new car sounds like an expensive choice to you, it’s time to get a used car loan. A used car can be a reliable option when looking for your next set of wheels — as long as you ensure you get the right used car financing. In addition, a used car loan is another way for people with poor credit or no credit history. 

Although the allure of purchasing a new vehicle can be strong, buying a used car can usually result in shelling out significant savings. New cars depreciate as soon as they are driven off the lot, sometimes by more than 10% of their values; this is called off-the-lot depreciation and is an alternative option for prospective car buyers to consider.

Not only would it be an affordable option, but also there are many benefits of purchasing a used car instead of a new one, such as: 

Likewise, there can be some drawbacks that you should watch out for:

Buying a used car does carry a lower purchase price than buying a new one, and it makes sense if the budget is your main concern. But before making your choice examine the pros and cons, research the cost for the specific model you want and calculate repairs, insurance, and other costs.

Major types of used car loans

Auto loans come in many shapes, and there are the main types of car loans explained that a car buyer might come across:

The most common way Canadians obtain a car loan is by applying for the loan at the dealership when they are buying a vehicle. However, consider different options.

Why do you need a used car loan calculator?

Even a used vehicle purchase usually requires a significant financial investment that not everyone can afford to pay in cash right away, which results in taking out a used car loan. But before you borrow the money, you need to figure out how much you will pay because the overall price of the vehicle isn’t the number you need to pay attention to. Again, a calculator will be a great tool that will save you from difficult work and help to estimate your car loan payments. 

Let's start with the fact that each month the borrower will pay an amount to repay the loan. These monthly payments are based primarily on the car's original price, whether it is new or used, the down payment, the length of the loan, and your credit score. Also, don’t forget to consider other costs, such as taxes and insurance.

Important! The factor that influences your payment the most is the tenure of the loan. 

The loan terms vary from 12 to 96 months. As you’re spreading out the loan amount over a more significant number of months, the less your payment be. However, on the other hand, consumers pay higher interest rates when they stretch loan lengths. Likewise, the shorter the loan term, the lower the interest rates. Speaking of interest, it depends on your credit score and loan term. The higher your score, the lower APR you can get. 

All in all, a number of factors determine your final payment amount, and the calculator assists you when planning a budget for a car purchase not to end up paying more than you expected to. 

Note! The calculations are provided for general information purposes and should not be construed as financial, legal, or tax advice. Remember that whenever you apply for a used car loan, take the time to read the terms and conditions. It’s important to be aware of all fees and charges and any restrictions on the vehicle or loan.

How does a used car loan calculator work?

A used car in good condition with low mileage can be an excellent option for those who don't want to overpay for a new car. But it's essential to determine what kind of vehicle is desired and whether it is affordable for you before obtaining a loan. Online calculators will make researching and finding the best deals to suit your individual needs easier. Let’s look at how a used car loan calculator works so that you can have a better understanding.

There are plenty of calculators that you can find on the Internet, but their functions are more or less similar. To utilize the calculator, enter the auto price, interest rate, and tenure in months for which the auto loan is sought. After that, key in the down payment you are going to make. In case you are exchanging your old vehicle, input the trade-in value. Then choose your state and indicate sales tax and other fees, as a car comes with expenses beyond the vehicle price. Finally, check the box in case all fees should be included in the loan. Finally, hit the “calculate” button. 

Once the required information is entered, the calculator displays the total amount of loan and interest you'll pay over the life of a loan. The calculator can also offer a pie chart that depicts the total interest costs, total loan amount, and amortization schedule, where you can see how much interest you'll pay each month. 

Attention! Online calculators are not intended to provide financial advice; for more accurate information, you may talk to a financial advisor.

How to compare loans with a used car loan calculator

Driving off with the best-used car loan deal comes down to preparation. Get prepared before you visit the dealer to ensure you can get the best car loan and compare auto loans with a used car loan calculator. The calculator will allow you to compare multiple options for a used car loan, thus giving you the flexibility to choose a plan in terms of loan amount and tenure. Compare at least several options and pay close attention to each lender's interest rates, terms, and fees. Monthly car loan payment is directly affected by interest rates. Therefore, it is generally helpful to have some typical going rates in mind to compare financing options. 

Use the auto loan calculator when comparing available offers to estimate what your used car loan will cost. It will give you an idea of how much it will cost to take out a loan. To start, plug in the amount you wish to borrow, the length of your intended loan, and interest rate, and if needed, indicate that it is a used vehicle.

Adjust the term and rates and add extra monthly payments to see how much of an impact you can have on repayment. Of course, the interest rate varies by the lender, but you can assume your approximate interest rate based on your credit score. Average interest rates for used car loans by credit score are the following:

750 or higher: 4.90%—8%; 

700 to 749: 8%—14%; 

600-699: 14%—20%;

451-599: 20% and above.

You can also use the calculator that compares two loans. Customize different variables and consider more than one lender to get the best deal.

What is a reasonable interest rate on a used car loan?

Used cars might be cheaper, but used car loans tend to come with higher interest rates. That's because car loans are secured by the value of the vehicle you’re buying. Since used cars have less value, your collateral isn’t worth as much. This makes lenders see you as more of a risk than a new car buyer, who has higher collateral. Some online lenders can work with consumers with bad credit, no credit, or bankruptcy as long as they have a steady source of employment income. Bad credit loans often come with steeper interest rates. In case you have bad credit, interest rates can range from 10% to 20% or perhaps more. 

Having top-notch credit can help to get borrowers the lowest used car financing rates. Interest rates can vary depending on the borrower’s personal factors. APR varies from 4.90% to 30% and depends on the lender. The lower the interest rate, the better on a car loan. The major factor that determines the interest rate is your creditworthiness. This includes credit history, assets the borrower has, and most crucially, your credit score. The higher your credit score, the more lenders trust you that you repay the loan. 

That said, a generally reasonable APR would be around 5%—9% for a used car loan, provided that your score is 750 or higher. Of course, a 5% APR might not be achievable for someone with bad credit. To give you a better idea of the APR you might qualify for, here are the average interest rates for used car loans by credit score:

750 or higher: 4.90%—8%; 

700 to 749: 8%—14%; 

600-699: 14%—20%;

451-599: 20% and above. 

Is a 72-month car loan a good idea?

Financing a car begs the question of how long to finance it. The terms of a loan vary from 12 to 96 months. And a 72-month loan can sound like a good idea. But a 72-month loan - that’s six years -may not be a perfect idea as if having a long tenure, and you will end up paying more interest over the life of the loan. The longer you take to repay the loan, the more interest you pay overall. Interest is money down the drain. Not only that, but it is also well-known that cars depreciate within time, and obtaining a long-term loan doesn't make sense if your car will cost less over time than the remaining balance of your loan. In other words, you can end up owing more debt than your car is worth. So take a long hard look at what extending the loan costs you and finance it responsibly. That being said, trying to get the shortest loan term possible with a monthly payment you can still afford could be a better idea. For instance, a 60-month car loan could be a better choice than a 72-month.  

What is the average interest rate on a car loan with a credit rating of 700?

When it comes to providing car loans, according to Internet data, Canadian lenders typically approve consumers with a credit score of 630 or above. If your score is above 630, it shouldn't be difficult to gain approval to secure a loan. As with most things in the financial world, the better your credit score, the better your financing options will be when it comes to financing a car. It's not a secret that borrowers with excellent credit will most likely receive lower interest rates, which will result in paying less for a car overall. The APR of a used car loan will depend on the borrower’s personal factors, but generally, the APR of a used car loan will be higher than the APR of a new car loan. 

750 points or higher is considered to be excellent credit. A high score puts you in the “prime” category for borrowing. Getting a car loan when your credit is between 700 and 749 can be more expensive than it is for borrowers with better credit scores. In this case, the borrowers most likely get an 8%—14% interest rate.

How much would you pay monthly for a $30,000 car?

Thinking ahead and budgeting money is essential when it comes to getting a loan. The first thing is needed to know is how much you will be shelling on car payments every month. The monthly payment is the best indicator of how the car loan will impact your budget. Monthly payments are influenced by a number of factors, including the auto price, the interest rate, loan term, and credit score. Your credit score makes a huge difference in the amount of interest you pay. It affects both the total cost of the car and the size of your monthly payments. The shorter the loan term, the lower the interest rates. Used car loans typically come with higher interest rates than new car financing because there’s more uncertainty as to the value of the car, and lenders can demonstrate that used car borrowers default more frequently on their auto loans, regardless of their credit. 

The rate is affected not only by the age of the car but also by your credit rating. Borrowers with top-notch credit get the lowest used car financing rates. Here are the average rates available according to your score: 

750 or higher: 4.90%—8%; 

700 to 749: 8%—14%; 

600-699: 14%—20%;

451-599: 20% and above. 

With a loan amount of $30,000, an interest rate of 8%, and a loan repayment period of 60 months, your monthly payment is around $608. In comparison, a $30,000 loan at 11% for 60 months would equal a monthly payment of $652. That is, you will pay $44 more each month which will result in an overpayment of interest of $2,638. If we make the tenure shorter, than the total interest paid will decrease. In the specific case, a $30,000 loan at 11% for 48 months would equal a monthly payment of $732. The same loan amount and the interest paid over a shorter tenure would lower your interest paid up to several thousands, saving you a whopping $1,343 in interest over the life of the car loan.

By trying different options, you can understand what monthly payment you can expect. The easiest way to find out the monthly payment and the whole amount is to utilize the auto loan calculator. Using a calculator, you can compare different offers and choose the best option that suits your needs. 

Keep in mind that the calculations are for general information purposes only and should not be relied upon as specific financial or other advice.