Auto loan calculator
Enter the car's price, what you're putting down and your trade-in, and see the real monthly payment — with sales tax, dealer fees and any money you still owe on your old car rolled in.
| Term | Monthly | Total interest | Total paid |
|---|
On this page
- How this car payment is worked out
- Worked example: a $32,000 car
- 36 vs 60 vs 84 months: what the term really costs
- Negative equity: when you owe more than your trade-in is worth
- Sales tax and trade-ins
- How much car payment is too much?
- Ways to lower the payment without paying more overall
- Frequently asked questions
How this car payment is worked out
Dealers like to talk about the monthly number, but the monthly number is the last thing to calculate. First you need the amount financed: the vehicle price, minus your cash down payment, minus the equity in your trade-in, plus sales tax and fees if you roll them in. Only then does the loan formula turn that amount, your APR and the term into a payment:
M = P × r(1 + r)n ÷ ((1 + r)n − 1), where P is the amount financed, r is the APR divided by 12, and n is the number of monthly payments.
The calculator above does exactly that, then runs the loan month by month so you can see how quickly the balance falls and how much of each year's payments go to interest.
Worked example: a $32,000 car
- Price: $32,000, with $4,000 cash down and a $6,000 trade-in you own outright
- Sales tax: 6.5% on $26,000 (price minus trade-in) = $1,690
- Fees: $900 for documentation, title and registration
- Amount financed: $32,000 − $4,000 − $6,000 + $1,690 + $900 = $24,590
- Payment at 7.2% APR over 60 months: about $489 a month
- Total interest: about $4,764 over the five years
Notice that the trade-in did double duty here. It cut the amount you borrow by $6,000 and it cut the taxable price, saving another $390 in sales tax.
36 vs 60 vs 84 months: what the term really costs
Same $24,590 loan, same 7.2% APR, three different terms:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $762 | $2,825 |
| 60 months | $489 | $4,764 |
| 84 months | $374 | $6,787 |
Stretching to seven years knocks about $390 off the monthly bill but costs roughly $4,000 more in interest than the three-year loan. In real life the gap is usually wider, because lenders tend to charge a higher APR on longer terms. The bigger risk is time spent "upside down": cars lose value fastest in the first few years, and on an 84-month loan the balance falls slowly enough that you can owe more than the car is worth for a long stretch. We dig into this in Is a 72-month car loan a bad idea?
Negative equity: when you owe more than your trade-in is worth
If your current car is worth $6,000 but you still owe $8,500 on it, you have $2,500 of negative equity. The dealer pays off your old loan, but that $2,500 doesn't disappear. It's added to the new loan, and you pay interest on it for another five or six years. Enter the amount you still owe in the "Still owed on trade-in" box and the calculator adds the shortfall automatically, so you can see what rolling it over really costs. If the number makes you wince, keeping the old car a little longer and paying it down is often the cheapest move.
Sales tax and trade-ins
In most US states you only pay sales tax on the difference between the new car's price and your trade-in's value. A handful of states tax the full price regardless of any trade-in, so untick the box if that applies where you live. Sales tax rates also vary by city and county, so use your combined local rate rather than the state headline rate. In the UK, VAT is already included in a dealer's advertised price, so set sales tax to 0 and leave the box ticked.
How much car payment is too much?
A popular rule of thumb is 20/4/10: put at least 20% down, borrow for no more than 4 years, and keep total car costs (payment, insurance, fuel and maintenance) under 10% of your gross monthly income. Very few buyers hit all three today, and that's fine, but each one you miss makes the car more expensive or riskier. Add your income above and the calculator scores your deal against all three. For the full reasoning, read How much car can I afford?
Ways to lower the payment without paying more overall
- Get pre-approved before you visit the dealer. A quote from a credit union or bank gives you a rate to beat, and dealer finance departments often will.
- Negotiate the price, not the payment. "What monthly payment are you looking for?" is how a $400 payment quietly becomes a longer loan.
- Pay tax and fees upfront if you can. Untick "roll tax and fees into the loan" to see how much interest that saves.
- Skip or shop the add-ons. GAP cover, extended warranties and paint protection bundled into the loan inflate the balance you pay interest on.
- Put more down. Every extra $1,000 down saves the interest on that $1,000 for the whole term. See how much to put down on a car.
Frequently asked questions
How is a car payment calculated?
Work out the amount financed (price minus down payment and trade-in equity, plus any tax and fees you roll in), then apply the amortization formula M = P × r(1+r)^n ÷ ((1+r)^n − 1), where r is the APR divided by 12 and n is the number of months.
Does a trade-in reduce sales tax?
In most US states, yes: sales tax is charged on the price minus the trade-in value. A few states tax the full vehicle price, so check your state's rules and untick the box in the calculator if yours doesn't give the credit.
What happens to negative equity when I trade in a car?
The dealer pays off your old loan and adds the shortfall (what you owe minus what the car is worth) to your new loan. You then pay interest on it for the new loan's full term.
Is it better to roll taxes and fees into the loan?
Paying them upfront is cheaper because you avoid paying interest on them. Rolling them in only makes sense if you'd otherwise drain your emergency savings.
What is a good APR for a car loan?
It depends mostly on your credit score, whether the car is new or used, and the term. Borrowers with excellent credit get the lowest published rates; used cars and longer terms usually carry higher APRs. Compare at least two lender quotes with the dealer's offer.
How long should a car loan be?
Shorter is cheaper. A 36–48 month term keeps interest low and reduces the time you owe more than the car is worth. Terms of 72–84 months lower the payment but raise the total cost.
This calculator gives estimates for information only, not financial advice. Your actual payment depends on the lender's approved APR, your state's tax rules and the exact fees on your purchase agreement.