One percentage point on a $30,000 car loan is $855

On a $30,000 car loan over five years, one percentage point of interest is about $14 a month. Over the life of the loan it is $855. That is the difference between 7% and 8% on the same car, the same loan and the same term.

7% against 8%

• At 7%: $594.04 a month, $5,642 of interest in all.
• At 8%: $608.29 a month, $6,498 of interest in all.

$14.25 a month does not sound like much. It is paid sixty times.

Both rates are round examples. The auto loan calculator works out the payment and the interest for any price, rate and term.

A wider gap

Rates on car loans are spread over a wide range, so the difference between two borrowers can be much more than one point. The same loan at 12%:

At 12% the payment is $667.33, which is $73 a month more than at 7%, and the interest is $4,398 more over the five years.

Where the rate comes from

A lender sets the rate from your application. Your credit history is one of the things it looks at, along with income, the size of the loan, the term and the car itself. This site has no verified table of which credit scores get which rates, and lenders differ, so it does not print one.

What the arithmetic can say is what a difference in rate is worth once you have two quotes in hand. Enter each in the calculator and compare the total interest, not just the payment.

What this leaves out

• The term. A longer loan lowers the payment and raises the interest. This article works through 60 months against 84.
• Fees, taxes and add-ons. Anything rolled into the loan is charged interest too.
• The rate you will get. Your lender will quote the real figure.

An estimate from example figures, not financial advice.