$60,000 Car Loan over 7 years: what it costs each month
What a $60,000 car loan over 7 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 $60,000 over 7 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 $29.61 and the total interest by about $2,487.
$60,000 over 7 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 4% | $820.13 | $8,891 | $68,891 |
| 5.5% | $862.20 | $12,425 | $72,425 |
| 7% | $905.56 | $16,067 | $76,067 |
| 9% | $965.34 | $21,089 | $81,089 |
| 12% | $1,059.16 | $28,970 | $88,970 |
| 15% | $1,157.81 | $37,256 | $97,256 |
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 $60,000 over 84 months at 7% APR the monthly rate is 0.5833%, which gives $905.56. Multiplying by 84 months gives $76,067 repaid in total, so the cost of borrowing is $16,067.
Should you borrow $60,000 over 7 years or a different term?
A longer term lowers the monthly payment but you pay interest for longer. At 7% APR, repaying $60,000 over 3 years costs $1,852.63 a month and $6,695 in interest, while 7 years costs $905.56 a month and $16,067 in interest. That is $9,373 more for the lower payment.
$60,000 at 7% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 3 years | $1,852.63 | $6,695 | $66,695 |
| 4 years | $1,436.77 | $8,965 | $68,965 |
| 5 years | $1,188.07 | $11,284 | $71,284 |
| 6 years | $1,022.94 | $13,652 | $73,652 |
| 7 years | $905.56 | $16,067 | $76,067 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this $60,000 loan, $3,982 of your $10,867 goes on interest and $6,885 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.
$60,000 at 7% APR over 7 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | $3,982 | $6,885 | $53,115 |
| 2 | $3,484 | $7,383 | $45,733 |
| 3 | $2,951 | $7,916 | $37,816 |
| 4 | $2,378 | $8,488 | $29,328 |
| 5 | $1,765 | $9,102 | $20,226 |
| 6 | $1,107 | $9,760 | $10,466 |
| 7 | $401 | $10,466 | $0 |
Totals for each year of the loan.
What happens if you overpay your $60,000 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 $60,000 loan at 7% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +$90 a month | $995.56 | 75 months | $1,920 |
| +$180 a month | $1,085.56 | 67 months | $3,424 |
| +$360 a month | $1,265.56 | 56 months | $5,627 |
Compared with the normal 7 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 $905.56 payment fits that guide if your monthly take-home pay is at least $2,717.
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 $9,373 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 7 years adds about $15.09 to the monthly payment.
Sources and further reading
Questions people ask
How much is a $60,000 car loan per month over 7 years?
How much interest will I pay on $60,000 over 7 years?
Is it cheaper to borrow $60,000 over a shorter time?
What income do I need for a $60,000 car loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.