Payments would be around $377 per month. According to the results, it will take you 60 months, an interest rate of 5% of $2,645, to fully pay your $20,000 car loan.
For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.
The monthly payment on a $20,000 loan ranges from $273 to $2,009, depending on the APR and how long the loan lasts. For example, if you take out a $20,000 loan for one year with an APR of 36%, your monthly payment will be $2,009.
A rule of thumb for down payments on new car loans is 20% of the purchase price, which helps you avoid owing more on the loan than the car is worth.
Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
If your credit score isn't good, however, you're typically required to make a down payment of at least $1,000 or 10% of the vehicle's selling price. This varies by lender, and some may accept the lesser amount. On a $20,000 car, that would be up to $2,000 down.
How to qualify for a 0% APR car deal. Zero percent financing deals are generally reserved for borrowers with excellent credit — typically classified as a credit score of 800 and above.
Payments would be around $377 per month. According to the results, it will take you 60 months, an interest rate of 5% of $2,645, to fully pay your $20,000 car loan. However, the monthly cost of a $20,000 car loan will depend on your repayment period and the annual percentage rate (APR).
Avoid Being Upside Down on the Loan
Let's say you put $1,000 down on a $20,000 vehicle and finance $19,000 of the sticker price. With a 5% interest rate and a 60-month term, you'd owe $15,569.45 at the end of the first year. If your car were now worth less than that, you'd be upside down on your loan.
In general, it's recommended to spend no more than 10% to 15% of your monthly take-home income on your car payment, and no more than 20% on your total vehicle expenses, including insurance and registration. Read on to learn how you can determine how much car you can afford based on your financial situation.
$20,000 loans may be available to people with no credit or bad credit, these options likely will come with higher interest rates, fees, or even the need to provide collateral to get approved. If you don't have a strong credit history, lenders might consider you a risk and structure your loan terms with that in mind.
Bottom line. Taking out a $20,000 personal loan is a major financial decision. Before you move forward, first figure out if you actually need to take out such a large loan. Then estimate your borrowing costs to see how much you'll spend over the life of the loan.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.
Loan amount
If you borrow $20,000 over five years with a 5 percent interest rate, you'll pay $2,645.48 in interest on an amortized schedule.
As most borrow money from banks quite often, they already take care of that by default. On average, they get an APR of 2.89%, which obliges them to pay the following amounts monthly on a $15,000 loan: 12 months. $1269.25.
Making a large down payment on a car may also limit your financing or refinancing options. Some lenders may not offer financing if you propose to make a down payment that the lender deems too large. You might not meet a lender's financing requirements if you're seeking to put 90% down on a vehicle that costs $25,000.
Just because it's their first car doesn't mean it needs to be their most expensive one, which is why many parents opt for used cars. Based on that approach, anywhere from $5,000 to $20,000 is generally recommended.
Financial experts recommend spending no more than about 10% to 15% of your monthly take-home pay on an auto loan payment. These percentages do not factor in total car expenses, including gas, insurance, repairs and maintenance costs.
The average monthly payment for new vehicles hit a record high of $730 during the first quarter of 2023, according to Edmunds. So if you're now on the hook for $750, it may just be that you had to buy a larger car, like a minivan or SUV, to accommodate a bigger family.
The end of the calendar year — specifically October, November and December — is typically one of the best times for car shoppers to get deals on vehicles. Cars sold during this time usually come with higher discounts and incentives than those sold during other times of the year.
To reach an 800 credit score, you'll want to demonstrate on-time bill payments, have a healthy mix of credit (meaning accounts other than just credit cards), use a small percentage of your available credit, and limit new credit inquiries.
A target credit score of 661 or above should get you a new-car loan with an annual percentage rate of around 6.88% or better, or a used-car loan around 9.33% or lower. Superprime: 781-850. 5.61%.