Enter your car, loan and running costs. See the true all-in monthly cost and lifetime opportunity cost.
Should I pay cash or finance a car? If you can earn more investing the cash (e.g. 7%) than the loan APR (e.g. 3%), financing and investing the cash wins mathematically. At high APRs (7%+), paying cash is usually better.
Methodology: Calculations use standard financial mathematics — Future Value of Annuity (FV = PMT × ((1+r)n − 1) / r), standard loan amortization for debt payoff, and the historical ~7% real S&P 500 return for opportunity-cost projections. All formulas are deterministic and identical to those used by Certified Financial Planners.
This calculator reveals the full amount you actually pay for a financed vehicle — sticker price plus every dollar of interest over the loan term — and compares it to buying the same car with cash or choosing a less expensive alternative. It's for anyone negotiating a car purchase who wants to see what "just $450/month" really costs over 60 or 72 months.
Car loan interest is calculated using simple amortization: Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (APR ÷ 12), and n is the number of payments. Total interest paid = (Monthly Payment × n) − P. A $35,000 car at 7% APR over 60 months costs $41,162 total — $6,162 in interest on top of the purchase price.
Cars are the second-largest purchase most people make, and financing is the default. The average new car payment in the US hit $735/month in 2024 at an average APR of 7.1% — with average loan terms stretching to 68 months. On those terms, buyers pay roughly $8,000–$12,000 in interest per vehicle. Over a lifetime of car payments (most people buy 8–10 cars), that's $80,000–$120,000 in interest alone.