Auto loan calculator

How is a car payment calculated?

First the amount financed: price − down payment − trade-in + sales tax + fees. A $30,000 car with $3,000 down, a $5,000 trade-in and 7% tax on $25,000 finances $23,750; at 7% for 60 months that is $470.28 a month.

Is sales tax charged before or after the trade-in?

It depends on the state — many tax only the difference after the trade-in, some tax the full price. Pick the option your state uses.

Should I choose a longer loan?

A 72- or 84-month loan lowers the payment but costs more interest, and the car can be worth less than you owe for longer. Compare the total interest in the result.

How much interest will I pay?

On the example above, $4,466.71 over 60 months. A bigger down payment or a lower rate cuts it directly.

Are dealer fees included?

Enter them in "Fees" — documentation, title and registration fees vary by dealer and state and are often rolled into the loan.

Does a bigger down payment lower the interest rate?

Not directly through this calculator, which takes the rate you enter. A larger down payment does lower the amount financed, so the same rate costs less in interest, and some lenders offer better rates when the loan is a smaller share of the car's value.

What if I owe more than the car is worth?

Negative equity from an old loan is sometimes rolled into the new one. If you do that, enter it in the Fees box to see its effect. It raises both the payment and the interest, and starts the new loan already owing more than the car is worth.

Is the payment shown the whole monthly cost of the car?

No. It covers the loan only. Insurance, fuel, maintenance and registration are separate, and lenders commonly require full-coverage insurance while the car is financed.

How the calculation works

The amount financed is the price minus the down payment and the trade-in, plus sales tax and fees. Sales tax is applied either to the full price or only to the price after the trade-in, depending on what your state does. The monthly payment is the standard level-payment formula, P × r ÷ (1 − (1 + r)^−n), with r the annual rate divided by 12 and n the number of months. Total interest is the payments added up minus the amount financed. The calculation assumes a fixed rate, monthly payments from the first month, and no extra charges beyond the fees you enter.

Worked example

A car costs $32,000, with $4,000 down and a $6,000 trade-in. The sales tax is 6.5% on the price after the trade-in, so tax is 6.5% × $26,000 = $1,690, and fees are $800. The amount financed is $32,000 − $4,000 − $6,000 + $1,690 + $800 = $24,490. At 7.5% for 60 months the payment is $490.73 and the interest totals $4,954.

Stretching the same loan to 72 months drops the payment to $423.43 but raises the interest to $5,997; at 84 months it is $375.63 and $7,063. If the state taxed the full price instead, the tax would be $2,080, the amount financed $24,880 and the 60-month payment $498.54.

Common mistakes

• Shopping by monthly payment alone. Longer terms lower the payment and raise the interest. Compare the total cost and how fast the balance falls against how fast the car loses value.
• Forgetting tax and fees. Financing the price alone understates the loan by thousands. Tax rules for a trade-in differ by state, so choose the matching option.
• Entering the dealer's advertised rate for a different credit tier. Advertised rates are usually for the best credit scores and short terms. Use the rate on your own offer.

Sources and related calculators

Method: the level-payment amortization formula for a fixed-rate installment loan, the same formula used on the amortization and loan calculators. Related: amortization calculator, lease calculator and sales tax calculator.

Estimates for planning only — not financial, tax or legal advice. Your lender's or employer's figures decide. How we check our calculators.