How to use the auto loan calculator
- Enter the vehicle price you have negotiated, before tax and fees.
- Add your down payment and any rebate or manufacturer incentive that comes off the price.
- Enter the APR and pick a term from 24 to 84 months.
- Add a trade-in: its value and how much you still owe on it. If you owe more than it is worth, the difference (negative equity) is added to the new loan and the calculator warns you.
- Set the sales tax rate and fees. Tick or untick the boxes to match how your state taxes trade-ins and rebates, and whether you roll tax and fees into the loan or pay them up front.
- Read the monthly payment, amount financed, total interest and total cost, then use Compare loan terms and the amortization schedule below.
How the car payment is worked out
First the calculator finds the amount financed: the vehicle price, minus the rebate, minus the down payment, minus your trade-in equity (value minus what you owe), plus sales tax and fees if you finance them. The sales tax is the rate you enter times the taxable price. In most states the taxable price is the price after the trade-in credit, so a $10,000 trade-in at a 6% rate saves $600 of tax. A few states tax the full price before the trade-in, and states also differ on whether a manufacturer rebate lowers the taxable price. That is why both are switches.
The monthly payment then comes from the standard amortization formula for a fixed-rate loan: each month interest is charged on the remaining balance at one twelfth of the APR, and the rest of the payment reduces the balance. Most auto loans work this way (simple interest), so paying early or paying extra cuts the interest you owe.
Worked example
A $35,000 car with $4,000 down, 6% sales tax ($2,100) and $1,200 of title, registration and documentation fees rolled into the loan gives an amount financed of $34,300. At 7% APR over 60 months the payment is $679.18 a month, the total interest is $6,450.87 and the car costs $44,750.87 in all.
The term changes the picture a lot. The same loan over 36 months costs $1,059.08 a month but only $3,827.04 in interest; over 84 months the payment drops to $517.68 but interest rises to $9,185.03, and that is before any higher rate a lender may charge for a longer term.
Now add a $10,000 trade-in with $3,000 still owed. With the trade-in credit, tax falls to $1,500 (6% of $25,000), the trade adds $7,000 of equity, and the amount financed drops to $26,700, a payment of $528.69.
What can make your real payment different
- The APR you are offered depends on your credit, the lender, the term and whether the car is new or used.
- Add-ons such as extended warranties, GAP coverage or service plans increase the amount financed if they are rolled into the loan.
- Fees and tax rules vary by state and county, and some areas add a local sales tax to the state rate.
- Car loan interest deduction: for 2025 to 2028, interest on a loan for a qualifying new personal vehicle with final assembly in the United States can be deducted, up to $10,000 a year, phasing out above $100,000 of modified AGI ($200,000 for joint filers). The "interest in the first 12 payments" figure helps you estimate it. This calculator does not include tax savings.
Related calculators
Check how the payment fits your budget with the paycheck calculator or the US salary calculator. For other borrowing use the loan calculator or the mortgage calculator, and to clear existing balances first try the debt payoff calculator. All tools are listed under salary and money calculators.
Frequently asked questions
How is a monthly car payment calculated?
Take the amount financed (price minus rebate, down payment and trade-in equity, plus any tax and fees you finance) and apply the amortization formula with the monthly rate (APR ÷ 12) and the number of months. The payment stays the same each month; the share that goes to interest shrinks as the balance falls.
Is sales tax charged before or after the trade-in?
In most states you pay sales tax on the price after the trade-in value is deducted, which can save hundreds of dollars. A few states tax the full price. Untick "Tax the price after the trade-in credit" to see the difference, and check your state's rules before you sign.
Is a 72 or 84-month car loan a good idea?
A longer term lowers the monthly payment but increases the total interest, and you may owe more than the car is worth for longer because cars lose value quickly. The Compare loan terms table shows the payment and interest for each term side by side.
What happens if I owe more on my trade-in than it is worth?
That shortfall, called negative equity, is usually added to the new loan. You then pay interest on it and start the new loan owing more than the new car is worth. Paying it down first or making a bigger down payment avoids this.
Should I put taxes and fees in the loan?
Financing them keeps cash at signing low, but you pay interest on them for the whole term. Untick "Include sales tax and fees in the loan" to see the lower payment and total interest when you pay them up front.
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