Finance · Auto Loan
Auto Loan Calculator
Estimate your monthly car payment with down payment, trade-in and sales tax. See your total interest and the full cost of the loan — free and no sign-up.
How the auto loan calculator works
Your car payment depends on the amount you actually finance, the interest rate, and how long you take to pay it off. The calculator works in three steps:
- Sales tax — the tax rate is applied to the vehicle price: price × tax rate. This calculator taxes the full price for simplicity.
- Loan amount — what you finance is the price plus sales tax, minus your down payment and trade-in value: loan = price + tax − down − trade-in.
- Monthly payment — the loan is amortized using the standard formula below.
The monthly payment formula is:
M = L · r · (1 + r)n / ((1 + r)n − 1)
Where L is the loan amount, r is the monthly interest rate (APR ÷ 12 ÷ 100), and n is the number of months. If the APR is 0%, the payment is simply the loan amount divided by the term.
Example
A $30,000 car with a $5,000 down payment, 6% APR over 60 months (and the sales tax field cleared) finances $25,000 and works out to about $483 per month.
Things to keep in mind
Sales tax rules vary by state
This calculator applies sales tax to the full vehicle price. In several states, your trade-in value is subtracted before tax is calculated, which lowers the taxable amount. Check your state's department of motor vehicles for the exact treatment.
APR is not the same as the interest rate alone
The APR includes the interest rate plus certain lender fees, so it reflects the true yearly cost of borrowing. Always compare loans using APR rather than the headline rate, and get pre-approved before shopping to know your real number.
Longer terms cost more overall
Stretching a loan to 72 or 84 months lowers the monthly payment but raises the total interest and keeps you in debt longer. Use the "total of payments" line to see the real cost of a longer term.
Frequently asked questions
How is my monthly car payment calculated?
It is based on the amount financed (price + sales tax − down payment − trade-in), the APR, and the term in months, using the amortization formula M = L·r·(1+r)^n / ((1+r)^n − 1).
Does a bigger down payment lower my payment?
Yes. Both your down payment and trade-in reduce the amount financed, which lowers your monthly payment and the total interest paid.
How does sales tax affect the loan?
Sales tax is calculated on the vehicle price and added to the amount financed. Some states reduce the taxable amount by your trade-in, so check your local rules.
What is a good APR for a car loan?
It depends on your credit score, the lender, and whether the car is new or used. Excellent credit earns the lowest rates. Shop multiple lenders and get pre-approved for the best deal.
Should I choose a longer loan term?
A longer term lowers your monthly payment but increases total interest and keeps you in debt longer. Compare the total of payments across terms before deciding.
New car vs. used car financing
Whether you buy new or used has a real effect on your loan, not just the sticker price. Lenders generally offer their lowest advertised APRs on new vehicles, partly because a new car is easier to value and resell if the loan defaults, and partly because manufacturers sometimes subsidize promotional financing on new models. Used-car loans typically carry a somewhat higher APR for the same borrower, and the gap widens for older or higher-mileage vehicles.
The trade-off is depreciation. A new car loses a large share of its value in the first few years, which means you can owe more than the car is worth early in the loan — a situation called being "upside-down" or having negative equity. A used car has already absorbed that steepest part of the depreciation curve, so even with a slightly higher rate the total cost of ownership can be lower. When you compare a new and used option, enter both into the calculator with their realistic APRs rather than assuming the lower new-car rate makes new the cheaper choice overall.
How loan term changes total cost
Dealers often quote you a monthly payment rather than a total price, and the easiest way to make any car fit a budget is to stretch the term. The example below finances the same $25,000 at a 6% APR and changes only the number of months. Watch the monthly payment fall while the total interest climbs.
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 36 months | ~$761 | ~$2,380 | ~$27,380 |
| 48 months | ~$587 | ~$3,180 | ~$28,180 |
| 60 months | ~$483 | ~$4,000 | ~$29,000 |
| 72 months | ~$414 | ~$4,840 | ~$29,840 |
Going from 36 to 72 months cuts the monthly payment by roughly $347, which is why long terms are so tempting. But the same move roughly doubles the total interest and keeps you in debt for three extra years — years during which the car keeps depreciating. A common pitfall with 72- and 84-month loans is that the car may be worth less than the loan balance for much of the term, leaving you stuck if you want to sell or trade it in early.
The impact of your down payment and trade-in
Both your down payment and your trade-in value reduce the amount you finance, and the effect compounds because you avoid paying interest on every dollar you do not borrow. Using the same $30,000 car at 6% APR over 60 months, here is how adding cash down changes the picture (sales tax left out for clarity).
| Down payment | Amount financed | Monthly payment | Total interest |
|---|---|---|---|
| $0 | $30,000 | ~$580 | ~$4,800 |
| $3,000 | $27,000 | ~$522 | ~$4,320 |
| $6,000 | $24,000 | ~$464 | ~$3,840 |
A larger down payment lowers both the monthly payment and the total interest, and it also reduces the risk of negative equity early in the loan. A useful guideline many buyers follow is to put down enough that the loan balance never exceeds the car's value — though this is a goal, not a strict requirement.
Dealer financing vs. bank or credit union
You have two broad ways to finance a car: through the dealership, or through your own bank or credit union. Dealer financing is convenient and sometimes carries genuine promotional rates from the manufacturer, especially on new cars. But dealers can also mark up the rate above what the lender approved and keep the difference, so the convenient option is not always the cheapest.
Getting pre-approved by a bank or credit union before you shop gives you two advantages: you know your real APR and budget in advance, and you can use that pre-approval to negotiate with the dealer. If the dealer can beat your pre-approved rate, take it; if not, you already have financing in hand. Credit unions in particular are often competitive on auto loans for their members. The point is to treat the rate as something you shop for separately from the car itself.
Common misconceptions
- "A low monthly payment means a good deal." A low payment usually just means a long term. Always check the total of payments to see what the car actually costs.
- "0% APR is always the best offer." Promotional 0% financing sometimes requires giving up a cash rebate. Compare the rebate-plus-loan path against the 0% path before assuming 0% wins.
- "APR and interest rate are the same thing." APR includes certain fees on top of the interest rate, so it reflects the true yearly cost. Compare loans by APR, not the headline rate.
- "I should negotiate the monthly payment." Negotiate the out-the-door price of the car first. Negotiating the payment lets the dealer hide a higher price inside a longer term.
How to use the results wisely
This tool is most useful as a budgeting and comparison aid rather than a final quote. A few habits make it sharper:
- Decide your term before you walk in. Pick the shortest term whose monthly payment you can comfortably afford, then hold that line at the dealership.
- Add the realistic APR for your credit. The advertised rate is usually reserved for top-tier credit. If your score is mid-range, run a higher APR to see your real payment.
- Include your local sales tax. Tax can add a meaningful amount to the financed total. Use your state's rate, and remember some states tax only the price after the trade-in is subtracted.
- Compare the total paid, not the monthly line. When weighing new vs. used or short vs. long terms, the "total of payments" figure tells the real story.
More questions about car loans
What credit score do I need for a car loan?
There is no single cutoff, but higher scores earn lower APRs. Borrowers with excellent credit see the lowest advertised rates, while lower scores still qualify but at higher rates. Checking your score before shopping helps you set realistic expectations.
What does it mean to be upside-down on a car loan?
You are upside-down (or have negative equity) when you owe more on the loan than the car is worth. It is most common early in long-term loans because cars depreciate quickly. A larger down payment and a shorter term both reduce the risk.
Should I take the 0% APR offer or the cash rebate?
It depends. Run both: a 0% loan on the full price versus a regular loan on the price minus the rebate. Sometimes the rebate plus a normal loan costs less overall, especially on shorter terms. Compare the total paid for each.
What is gap insurance and do I need it?
Gap insurance covers the difference between what you owe and what your insurer pays if the car is totaled while you are upside-down. It can be worth it on a low-down-payment, long-term loan, and is often cheaper through your own insurer than through the dealer.
Can I pay off my car loan early?
Usually yes, and it saves interest. Most auto loans use simple interest, so extra payments go straight to the principal. Check for a prepayment penalty first, though they are uncommon on standard auto loans.
Does the calculator include dealer fees?
No. Documentation fees, registration, title and add-ons like extended warranties are not included. Ask for the full out-the-door price and add those costs to your vehicle price before financing for a complete estimate.