Lenders calculate auto loan interest in two ways: simple or pre-calculated

The amount of interest you pay each month varies

The amount you pay each month stays the same

Most car loans are simple interest loans

Acharged up front and amortized is

For example, if you have a $25,000 auto loan with a 48-month term and an interest rate of 4%

you will pay about $83 in interest and $481 in principal in the first month of the loan term

month, you'll only pay $2 in interest and $563 will be applied to the principal amount

Your lender determines your interest rate after reviewing your credit and finances

Several factors affect your rate, including how interest is calculated, your credit score, loan term and the amount of your down payment.