Auto Loan Calculator
Calculate monthly car payment including sales tax and trade-in. Enter car price, down payment, trade-in value, loan term, and interest rate for complete payment breakdown and amortization schedule.
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How It Works
Enter: car price, sales tax rate (applied to price), down payment, trade-in value, loan term (months), and interest rate. Loan amount = price × (1+tax) − down payment − trade-in. Monthly payment formula: PMT = PV × r(1+r)^n / [(1+r)^n − 1]. Full amortization table shows each payment split.
PMT = PV × r(1+r)^n / [(1+r)^n − 1]$30k car, 7% tax, $3k down, 60mo, 6.5% → $573/moTotal interest = (monthly payment × term) − loan amount. On a $25,000 loan at 6.5% for 60 months: total interest ≈ $4,267. Reducing term to 48 months saves about $1,200 in interest but raises payment by ~$100/month. The amortization schedule shows exactly when the loan is paid off.
Total cost = monthly × term | Interest = total − principal$25k at 6.5%, 60mo: monthly $487, total interest $4,267Every $1,000 more down or in trade-in reduces monthly payment by about $20-25 on a 48-60 month loan. More importantly, it reduces the risk of being underwater early in the loan. New cars depreciate 15-25% in year 1. A 10% down payment on a new car means you may be slightly underwater after the first year.
Each $1k more down ≈ $20-25/mo less payment (60mo term)$5k down vs $2k down on $30k car → saves ~$60/moEnter the same loan at different terms and compare. 60-month loans are the US average but 48-month loans save significant interest while payment increase is manageable. 72-month loans for lower payments often cost $2,000-3,000 more in interest. The amortization table shows monthly interest vs principal for each option.
48mo vs 60mo: higher payment, less total interest$25k at 6.5%: 48mo=$595/mo/$3,560 interest vs 60mo=$487/$4,267Two buyers, same $25,000 car: Excellent credit (750+) at 5.5% for 60 months pays $480/month, $3,785 total interest. Poor credit (580) at 18% pays $634/month, $13,040 total interest — $9,255 more. Improving your credit score before car shopping directly translates to savings.
Rate difference: same loan costs $thousands more at high APRExcellent vs poor credit on $25k car: ~$9k extra interestQuick Reference
Verify these in the calculator above.
Monthly
$30k car, 7% tax, $3k down, 60mo, 6.5%
$573/mo
Simple loan
$25k loan, 6.5%, 60mo
$487/mo
Interest
Total interest: $25k, 6.5%, 60mo
$4,267
48mo saves
48 vs 60mo on $25k, 6.5%
Save $707 interest
Credit impact
Poor vs good credit, $25k
~$9k extra interest
Down payment
20% down on $30k car
$6,000 down
Tax impact
7% tax on $30k car
+$2,100 to finance
Depreciation
New car: year 1 depreciation
20-30%
Tips & Shortcuts
Get pre-approved for a loan from your bank or credit union before visiting a dealer — this gives you leverage and ensures you get a competitive rate.
Focus on the total purchase price, not the monthly payment. Dealers can stretch the loan term to make any payment "affordable" while increasing total cost.
Research trade-in value on KBB.com or CarMax before the dealership. Accepting a low trade-in offer can cost more than the sticker price negotiation saves.
Sales tax is applied to the purchase price before down payment in most states — a 7% tax on a $30,000 car adds $2,100 to the loan amount.
GAP insurance is worth considering for long loans or small down payments — it covers the gap between what you owe and what the car is worth if totaled.
Common Mistakes
Negotiating monthly payment instead of purchase price
Dealers can extend the term to hit any monthly payment target while keeping the price high. Always negotiate purchase price first, then discuss financing separately.
Not including sales tax in the loan calculation
Sales tax is typically financed as part of the loan unless paid cash upfront. On a $30,000 car with 8% tax, the financed amount includes $2,400 in tax, raising the payment significantly.
Choosing the longest term just for the lower payment
72-month loans save $80-100/month but cost $2,000-4,000 more in total interest compared to 60-month loans. You also stay underwater longer as the car depreciates.
Forgetting that loan amount includes fees and accessories
Dealer fees, documentation fees, and add-on accessories increase the loan amount. Always verify the out-the-door price (including all fees) before calculating your loan.
Assuming dealer financing is competitive
Dealers often mark up financing rates. A bank or credit union pre-approval at 5.5% beats a dealer's 7.5% offer on the same term by $1,500+ over 5 years.
Frequently Asked Questions
Monthly payment = (Loan Amount × monthly_rate) / (1 − (1+monthly_rate)^(−term)). The loan amount = car price + tax − down payment − trade-in. The calculator handles all of this automatically from the inputs.
Rates vary by credit score. Excellent credit (750+): 5-6% APR. Good (700-749): 7-9%. Fair (650-699): 11-15%. Poor (below 650): 15-25%+. Dealer financing is often higher than bank or credit union rates. Always get pre-approved before negotiating.
The 15% rule: total car expenses (payment + insurance + fuel + maintenance) should not exceed 15% of take-home pay. The 20/4/10 rule: 20% down, loan no longer than 4 years, total car expenses under 10% of gross income.
A larger down payment reduces your loan amount, monthly payment, and total interest. It also helps avoid being underwater on the loan (owing more than the car is worth). However, the opportunity cost matters — money in an investment earning 8%/yr beats paying down a 5% car loan.
Shorter term: higher monthly payment but less total interest and less time underwater. Longer term: lower payment but more total interest and the car depreciates faster than you build equity. Generally, keep auto loans to 60 months (5 years) or less.
An underwater (or upside-down) loan means you owe more than the car is worth. New cars depreciate 20-30% in the first year. With a small down payment on a long-term loan, you can quickly be underwater. GAP insurance covers the difference if the car is totaled while underwater.
Trade-in value reduces the amount you need to finance. A $5,000 trade-in on a $30,000 car means you finance $25,000 instead of $30,000 (minus down payment, plus tax). Research your trade-in value using Kelley Blue Book or CarMax before visiting a dealer.
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