 TITLE: What’s the Average Car Loan Payment? CONTENT: How Is a Car Payment Determined?\n--------------------------------\nThere are several factors that will determine your payment on an auto loan. Here's what goes into the calculation:\n*   **Size of the loan**: Knowing how much you're borrowing is key because it's the amount you'll be liable for paying back. Your loan amount is the price of the vehicle plus fees, tax and interest, minus your down payment amount and value of your trade-in, if applicable. Loan fees can include an extended warranty, vehicle service contract, maintenance, GAP coverage or other add-ons.\n*   **Length of the loan**: Your loan's repayment term determines how much time you have to pay back the debt. The shorter the loan's length, the higher your monthly payment will be. Conversely, a longer loan term—84-month loans are becoming more common—will result in a lower monthly payment. Just keep in mind that the longer your repayment term, the more you'll ultimately pay in interest over the life of the loan.\n*   **Credit score**: Your credit score provides lenders with a snapshot of your overall credit health, and essentially tells them how risky you are as a borrower. With a higher credit score, you're less of a risk to a lender, so you may qualify for a lower interest rate that will bring down your monthly payment. A low credit score can drive up your interest rate and, in turn, your monthly payment.\n*   **Income**: In addition to your credit score, lenders consider your ability to repay the loan when determining your interest rate. More specifically, they'll look at your debt-to-income ratio (DTI), which is the percentage of your gross monthly income that goes toward debt payments. The lower your DTI, the better your chances of securing a lower interest rate and monthly payment.\nLet's say you qualify for a $30,000 loan on a new car with a 3.74% interest rate over 60 months. Your monthly payment would be $549, and you'd pay $2,939 in interest over the life of the loan. If you were to extend your repayment term to 72 months, the monthly payment would drop to $466, but the total interest paid would jump to $3,538.\nNow let's say you manage to reduce the interest rate to 3.24% by putting down $5,000 but keep the term at 60 months. Your new loan amount would be $25,000, your monthly payment would be $452, and you'd pay $2,113 in total interest charges. END