Car Loan Calculator

Enter the price, your down payment, your trade-in (and anything you still owe on it), your sales tax rate, fees, APR, and term. You get your real monthly payment, total interest, the total cost of the deal, and the same loan priced at every term from 36 to 84 months.

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How dealers sell payments, not prices

Walk into a dealership and the first real question you hear is some version of "what monthly payment are you comfortable with?" That question is doing a lot of work. The classic tool is the four-square worksheet: price, trade-in, down payment, and monthly payment on one page, so the finance manager can nudge all four at once and land you on a payment that feels fine while the price, the trade allowance, and the term quietly move against you. A payment can always be made to feel affordable; the term is the dial that does it, and every extra year on that dial is interest you pay.

The counter-move is old and it still works: negotiate the out-the-door price first (price plus tax plus every fee, one number, in writing), settle your trade-in as its own transaction, and only then talk about how to pay for it. This calculator is built for that moment: it shows what the whole deal actually costs, and what the same loan looks like at every term a dealer will offer, so a smaller payment can never masquerade as a smaller price.

The formula

Amount financed = Price − Down payment − (Trade-in value − Amount owed) + Sales tax + Fees
M = P × r(1 + r)n ÷ ((1 + r)n − 1)

The parenthesis is your trade equity. If you owe more on the trade-in than it is worth, it goes negative and the shortfall is added to the new loan: that is negative equity rolling in. Sales tax applies to the price minus the trade-in value in most states, or to the full price in states without a trade-in credit; the toggle above picks which. M is the monthly payment, P the amount financed, r the monthly rate (APR ÷ 12 ÷ 100), and n the number of monthly payments. We assume tax and fees are financed, which is how most deals are written; pay them in cash and the loan shrinks by that amount.

Worked example

A $32,000 car with $4,000 down and a $6,000 trade-in that still has $2,500 owed on it, in a state that charges 7% tax on price minus trade-in, with $500 of fees, at 6.9% APR for 60 months.

Trade equity: 6,000 − 2,500 = $3,500. Tax: (32,000 − 6,000) × 7% = $1,820. Amount financed: 32,000 − 4,000 − 3,500 + 1,820 + 500 = $26,820.

Payment: $529.80 a month. Sixty payments total $31,788.22, so the loan costs $4,968.22 in interest. Total cost of the deal, counting the down payment and the trade equity given up: $39,288.22.

The same $26,820 at 84 months? $403.48 a month, which sounds friendlier, and $7,071.97 of interest against $2,948.33 at 36 months: the stretched loan costs $4,123.64 more for the identical car.

The trade-in tax credit: your state decides

Most states charge sales tax on the price minus your trade-in value, which makes a trade-in worth more than its appraisal: in the example above, the $6,000 trade-in also erases $420 of tax. A handful of states (California is the best-known) tax the full price and give no credit, and a few others cap or limit it. We deliberately do not maintain a state-by-state table here, because these rules change and your county can add its own wrinkle: check your state DMV page or ask the dealer to show the tax line on the buyer's order, then set the toggle to match. One detail people miss: where the credit exists, it is based on the trade-in's full value, even if you still owe money on it.

Before you set foot on the lot

The old-school guardrail is 20 percent down and 48 months or shorter. It is not a moral rule; it is geometry. A car loses value fastest in its first year or two, and 20 percent down roughly covers that drop, so you are never underwater. A short term means the balance falls faster than the car's value for the rest of the loan too, and it keeps total interest small. When a deal only works at 72 or 84 months with little down, the guardrail has done its job: it is telling you the price is wrong, not the term.

On the rate: get preapproved before you shop. A credit union or bank will quote you a real APR, and that piece of paper changes the conversation in the finance office from "here is your rate" to "beat this number." Dealer-arranged loans can carry a marked-up rate, and the markup survives only when you have nothing to compare it to. Rate shopping is cheap: auto loan applications made within a short window count as a single inquiry on your credit, so gather two or three quotes and let them compete.

Frequently asked questions

Does my trade-in reduce the sales tax on a new car?

In most states, yes: tax is charged on the price minus your trade-in value, so a $6,000 trade-in at a 7% rate saves $420 in tax on top of what the trade-in itself is worth. A handful of states, California among them, tax the full price with no credit. Check your state DMV or your dealer paperwork, then set the toggle in the calculator to match.

What is negative equity on a car loan?

Negative equity means you owe more on your current car than it is worth as a trade-in. The shortfall does not vanish when you hand over the keys: it gets added to the new loan, so you drive off financing the new car plus the unpaid tail of the old one. If you can, pay the shortfall in cash or wait until the old loan is closer to paid off; rolling it in is how people end up two cars deep in one loan.

Are 72 and 84 month car loans a bad idea?

They are expensive and risky, which is different from forbidden. The long term buys a lower payment by paying interest for more years, and because cars depreciate fastest early, you spend a large slice of the term owing more than the car is worth. If the car is totaled during those years, insurance pays its value, not your balance. If a payment only works at 84 months, the honest fix is usually a cheaper car.

What is the out-the-door price?

The out-the-door price is the full amount the deal costs before financing: vehicle price plus sales tax plus every dealer, doc, and title fee. Negotiating that single number, rather than the monthly payment, is the strongest move a car buyer has, because a payment can be made to look small by stretching the term while the price quietly stays high.

How do I get the best interest rate on a car loan?

Get preapproved before you shop. Credit unions and banks will quote you a real APR based on your credit, and once you have that number in hand, the dealer's finance office has to beat it rather than invent it. Dealers can mark up the rate on loans they arrange, so a preapproval is both a price cap and a negotiating tool. Multiple auto loan applications inside a short window count as a single inquiry for credit scoring.

How much should I put down on a car?

The old-school guardrail is 20 percent down and a term of 48 months or shorter. Twenty percent roughly covers the first year's depreciation, so you are never underwater, and a short term keeps total interest small. Plenty of sensible deals bend those rules; the guardrail's real job is to make you notice when a deal needs a long loan and nothing down to feel affordable.

Should I finance the taxes and fees?

Most deals are written that way, and this calculator assumes it: tax and fees are added to the amount financed. That is convenient, and it also means you pay interest on your tax bill for years. Paying tax and fees in cash at signing shrinks the loan by exactly that amount; in our worked example it would cut the amount financed by $2,320.

Do I need gap insurance?

Gap insurance covers the difference between what your insurer says the car was worth and what you still owe if the car is totaled or stolen. Whether you need it mostly depends on how underwater the loan is: a big down payment on a short term rarely needs it, while a long loan with rolled-in negative equity almost always does. If you do want it, your auto insurer usually sells it far cheaper than the dealer's finance office.

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