$50,000 Car Loan over 5 years: what it costs each month
What a $50,000 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 $50,000 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 $23.76 and the total interest by about $1,426.
$50,000 over 5 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 4% | $920.83 | $5,250 | $55,250 |
| 5.5% | $955.06 | $7,303 | $57,303 |
| 7% | $990.06 | $9,404 | $59,404 |
| 9% | $1,037.92 | $12,275 | $62,275 |
| 12% | $1,112.22 | $16,733 | $66,733 |
| 15% | $1,189.50 | $21,370 | $71,370 |
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 $50,000 over 60 months at 7% APR the monthly rate is 0.5833%, which gives $990.06. Multiplying by 60 months gives $59,404 repaid in total, so the cost of borrowing is $9,404.
Should you borrow $50,000 over 5 years or a different term?
A longer term lowers the monthly payment but you pay interest for longer. At 7% APR, repaying $50,000 over 3 years costs $1,543.85 a month and $5,579 in interest, while 7 years costs $754.63 a month and $13,389 in interest. That is $7,810 more for the lower payment.
$50,000 at 7% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 3 years | $1,543.85 | $5,579 | $55,579 |
| 4 years | $1,197.31 | $7,471 | $57,471 |
| 5 years | $990.06 | $9,404 | $59,404 |
| 6 years | $852.45 | $11,376 | $61,376 |
| 7 years | $754.63 | $13,389 | $63,389 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this $50,000 loan, $3,226 of your $11,881 goes on interest and $8,655 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.
$50,000 at 7% APR over 5 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | $3,226 | $8,655 | $41,345 |
| 2 | $2,600 | $9,281 | $32,065 |
| 3 | $1,929 | $9,951 | $22,113 |
| 4 | $1,210 | $10,671 | $11,442 |
| 5 | $438 | $11,442 | $0 |
Totals for each year of the loan.
What happens if you overpay your $50,000 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 $50,000 loan at 7% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +$100 a month | $1,090.06 | 54 months | $1,045 |
| +$200 a month | $1,190.06 | 49 months | $1,878 |
| +$400 a month | $1,390.06 | 41 months | $3,121 |
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 $990.06 payment fits that guide if your monthly take-home pay is at least $2,970.
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 $7,810 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 $50,000 car loan per month over 5 years?
How much interest will I pay on $50,000 over 5 years?
Is it cheaper to borrow $50,000 over a shorter time?
What income do I need for a $50,000 car loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.