$15,000 Car Loan over 5 years: what it costs each month
What a $15,000 car loan over 5 years costs at different rates
The rate you are offered depends on your credit score (FICO or VantageScore), your income and how much you borrow. The same $15,000 over 5 years can cost very different amounts, so it is worth seeing the whole range before you apply.
Moving the rate by one percentage point, from 7% to 8%, changes the monthly payment by about $7.13 and the total interest by about $428.
$15,000 over 5 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 4% | $276.25 | $1,575 | $16,575 |
| 5.5% | $286.52 | $2,191 | $17,191 |
| 7% | $297.02 | $2,821 | $17,821 |
| 9% | $311.38 | $3,683 | $18,683 |
| 12% | $333.67 | $5,020 | $20,020 |
| 15% | $356.85 | $6,411 | $21,411 |
Fixed rate, equal monthly payments, no fees.
The formula behind the payment
The payment on a fixed-rate loan is: amount × monthly rate ÷ (1 − (1 + monthly rate)−months). For $15,000 over 60 months at 7% APR the monthly rate is 0.5833%, which gives $297.02. Multiplying by 60 months gives $17,821 repaid in total, so the cost of borrowing is $2,821.
Should you borrow $15,000 over 5 years or a different term?
A longer term lowers the monthly payment but you pay interest for longer. At 7% APR, repaying $15,000 over 3 years costs $463.16 a month and $1,674 in interest, while 7 years costs $226.39 a month and $4,017 in interest. That is $2,343 more for the lower payment.
$15,000 at 7% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 3 years | $463.16 | $1,674 | $16,674 |
| 4 years | $359.19 | $2,241 | $17,241 |
| 5 years | $297.02 | $2,821 | $17,821 |
| 6 years | $255.74 | $3,413 | $18,413 |
| 7 years | $226.39 | $4,017 | $19,017 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this $15,000 loan, $968 of your $3,564 goes on interest and $2,596 reduces what you owe. By the last year the split reverses, which is why paying off a loan early saves more in the early years than the later ones.
$15,000 at 7% APR over 5 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | $968 | $2,596 | $12,404 |
| 2 | $780 | $2,784 | $9,619 |
| 3 | $579 | $2,985 | $6,634 |
| 4 | $363 | $3,201 | $3,433 |
| 5 | $132 | $3,433 | $0 |
Totals for each year of the loan.
What happens if you overpay your $15,000 loan?
Paying a little extra each month cuts the balance faster, so less interest is charged. Check that your lender allows overpayments and whether there is a charge: many allow up to a set amount a year without one.
Overpaying a $15,000 loan at 7% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +$30 a month | $327.02 | 54 months | $314 |
| +$60 a month | $357.02 | 49 months | $563 |
| +$120 a month | $417.02 | 41 months | $936 |
Compared with the normal 5 years term. Fixed rate, no fees.
How to work out if the payment is affordable
A common check is to keep all debt repayments, including this car loan, below about a third of your take-home pay. A $297.02 payment fits that guide if your monthly take-home pay is at least $891.
Also look at what happens if your income drops. Choose a payment you could still make for several months without borrowing again.
What to check before you sign
- Compare offers from banks, credit unions and online lenders. Prequalifying with a soft credit check does not affect your credit score.
- Ask about origination fees, which are taken from the loan amount and raise the true cost.
- Check for a prepayment penalty. Most lenders do not charge one, but some do.
- Credit unions often offer lower rates than banks for members with fair credit.
Ways to pay less interest
- Pick the shortest term whose monthly payment you can comfortably afford. Going from 7 years to 3 years would save $2,343 on this loan.
- Improve your credit score before you apply: pay bills on time, keep card balances low and dispute errors on your reports.
- Make extra payments when you can, as long as there is no penalty. Each extra payment cuts the balance that interest is charged on.
- Borrow only what you need: every extra $1,000 at 7% over 5 years adds about $19.80 to the monthly payment.
Sources and further reading
Questions people ask
How much is a $15,000 car loan per month over 5 years?
How much interest will I pay on $15,000 over 5 years?
Is it cheaper to borrow $15,000 over a shorter time?
What income do I need for a $15,000 car loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.