Car Loan Calculator
Estimate your monthly auto loan payment including trade-in value, down payment, sales tax, and interest. Compare different loan terms to minimize total cost.
Monthly Payment
$642
for 60 months · 6.5% APR
Total Interest
$5,706
Loan Amount
$32,800
Sales Tax
$2,800
Total Interest
$5,706
Total Cost
$43,506
How the Car Loan Calculator Works
This calculator determines your monthly car payment by computing the financed amount (vehicle price + sales tax − trade-in − down payment) and applying the standard amortization formula. It shows total interest paid and overall cost of the vehicle.
Auto Loan Formula
PMT = L × [r(1+r)ⁿ] / [(1+r)ⁿ - 1] L = Loan amount (price + tax − trade-in − down payment)
r = Monthly interest rate (APR ÷ 12 ÷ 100)
n = Number of monthly payments (term in months)
Example: Financing a New Car
For a $35,000 vehicle with $5,000 down, $8,000 trade-in, 6% sales tax, at 5.9% APR for 60 months:
- Taxable amount = $35,000 − $8,000 = $27,000
- Sales tax = $27,000 × 6% = $1,620
- Financed amount = $35,000 + $1,620 − $8,000 − $5,000 = $23,620
- Monthly Payment ≈ $456
- Total Interest ≈ $3,720 · Total Cost ≈ $27,340
Tips to Get the Best Auto Loan
- Get pre-approved from your bank or credit union before visiting dealerships
- Keep the loan term to 60 months or less to avoid negative equity
- Put at least 20% down to reduce interest costs and avoid being underwater
- Negotiate the vehicle price separately from financing terms
- Check your credit score first — improving it 50 points can save 1-2% APR
- Compare at least 3 lender offers before signing
- Avoid rolling negative equity from your previous car into the new loan
Frequently Asked Questions
How is a car loan payment calculated?
Car loan payments use the standard amortization formula: PMT = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount (vehicle price minus down payment and trade-in), r is the monthly interest rate, and n is the total number of monthly payments. Sales tax is typically added to the vehicle price before calculating.
What is a good APR for an auto loan?
A good APR depends on your credit score and the loan term. As of 2025, excellent credit (750+) typically gets 4-6% for new cars. Good credit (700-749) sees 6-8%. Fair credit (650-699) may pay 9-13%. Used cars generally carry rates 1-2% higher than new cars for the same credit tier.
Should I include my trade-in value in the calculation?
Yes. Your trade-in value reduces the amount you need to finance. For example, if a car costs $35,000 and your trade-in is worth $8,000 with a $5,000 down payment, you only finance $22,000. This significantly lowers your monthly payment and total interest paid.
How does sales tax affect my car loan?
In most states, sales tax is calculated on the purchase price minus your trade-in value. This taxable amount is often rolled into the loan. For a $30,000 car with 7% tax, that adds $2,100 to your financed amount — increasing your monthly payment by about $35-40 on a 60-month loan.
Is a shorter or longer loan term better for a car?
Shorter terms (36-48 months) have higher payments but save thousands in interest and keep you from going "underwater" (owing more than the car is worth). Longer terms (72-84 months) lower payments but cost significantly more overall and risk negative equity. Most experts recommend 60 months maximum.
What is the difference between dealer financing and bank financing?
Dealer financing is arranged through the dealership (often marked up 1-2% from the buy rate). Bank or credit union financing lets you get pre-approved before shopping, giving you negotiating power. Compare both — sometimes dealers offer promotional 0% APR that beats bank rates.
How much should I put down on a car?
Financial experts recommend at least 20% down for new cars and 10% for used cars. A larger down payment reduces your monthly payment, total interest paid, and risk of negative equity. It also may qualify you for a better interest rate from lenders.