Auto Loan Calculator

A car payment is rarely just the sticker price divided by the months. Sales tax, a trade-in balance, a down payment and the finance charges all change the amount you borrow, and the term you choose changes both the payment and the total cost. This calculator works from the vehicle price you actually pay and returns the monthly payment, the amount financed, the total interest and the total cost of the car over the life of the loan.

The payment calculation is the same amortisation formula lenders use for any fixed-rate instalment loan: the amount financed times the monthly rate, compounded across the number of payments. What makes auto loans distinctive is how quickly the term changes the outcome. Stretching a loan from 48 to 72 months lowers the payment but raises the interest, and it keeps you upside down — owing more than the car is worth — for years.

Dealers often quote a monthly payment rather than a price, because a payment can be tuned with the term and the down payment until it fits a budget. Negotiating the price first, then arranging financing, separates the two decisions and usually saves money. Comparing the annual percentage rate your dealer offers against a rate from a credit union or bank is the single most effective check on the finance charge.

Sales tax is calculated here on the price net of the trade-in, which is how most US states assess it, though a few states tax the full purchase price. Registration, dealer fees and optional add-ons are not included, so treat this as the financing picture rather than the out-the-door price. Enter your own trade-in equity as a negative value if you owe more than the car is worth.

How the math works

Taxable amount = vehicle price − trade-in value; sales tax = taxable amount × tax rate.
Amount financed = vehicle price + sales tax − trade-in value − down payment.
Monthly payment = P × r × (1 + r)^n / ((1 + r)^n − 1) where P is the amount financed, r the monthly rate, n the number of payments.
Total cost = down payment + trade-in value + (monthly payment × n), which is what the car actually costs you including interest.

Frequently asked questions

How is a monthly car payment calculated?

It is the amount financed times the monthly interest rate, spread across the term with the standard amortisation formula. Adding sales tax and subtracting the trade-in and down payment gives the amount financed; a longer term lowers the payment but increases the total interest.

Is a longer loan term a good idea?

Longer terms reduce the monthly payment but cost more in total interest and keep you owing more than the car is worth for longer. A 72-month loan often leaves the borrower underwater for two to three years, which is a problem if the car is wrecked or you need to sell.

Should I take the dealer's financing or my bank's?

Compare both as an APR, not as a monthly payment, since the payment hides the term and fees. Dealers sometimes beat banks on promotional rates and sometimes mark up the rate; a pre-approved rate from a credit union or bank gives you a floor to negotiate against.

Does a trade-in reduce my sales tax?

In most US states, yes — sales tax is charged on the price minus the trade-in value. A handful of states tax the full purchase price, so check your state's rule. This calculator applies the trade-in before tax by default.

What is negative equity on a trade-in?

If you still owe more on your current car than the dealer allows for it, the difference is negative equity and it gets rolled into the new loan, increasing the amount financed. Enter your trade-in as a negative number to see that effect.

Are dealer fees included?

No. Documentation fees, title and registration, and add-ons such as extended warranties or paint protection are not part of the financed amount in this estimate. Ask for the out-the-door price to see every charge before you sign.

This auto loan calculator is an educational estimate. It excludes registration, dealer documentation fees, add-ons and any lender-specific charges, and sales tax rules vary by state. Confirm final figures with your lender before signing.

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How the math works

Frequently asked questions

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