Auto Loan Calculator
Calculate your monthly car payment including sales tax, down payment, and trade-in value.
Results
Visualization
How It Works
The Auto Loan Calculator helps you determine your monthly car payment by factoring in the vehicle price, down payment, trade-in value, loan term, interest rate, and sales tax. Understanding your actual monthly payment—including all costs—is essential for budgeting and comparing financing options before you buy a car. This tool is designed for both quick estimates and detailed planning scenarios. Results update instantly as you adjust inputs, making it easy to compare different approaches and understand how each variable affects the outcome. For best accuracy, use precise measurements rather than rough estimates, and consider running multiple scenarios to establish a realistic range of expected results.
The Formula
Variables
- Vehicle Price — The manufacturer's selling price of the car before taxes and fees (typically the MSRP or negotiated purchase price)
- Down Payment — The lump sum of cash you pay upfront to reduce the amount you need to borrow
- Trade-In Value — The value of your current vehicle that the dealer credits toward the purchase price of the new car
- Loan Term (Months) — The total length of the loan period in months (e.g., 60 months for a 5-year loan)
- Interest Rate (%) — The annual percentage rate (APR) charged by the lender on the borrowed amount
- Sales Tax Rate (%) — The local or state sales tax percentage applied to the vehicle purchase price
Worked Example
Suppose you want to buy a car priced at $28,000 with a 6% annual interest rate. You plan to make a $5,000 down payment, your trade-in is worth $3,500, and your sales tax rate is 7%. First, calculate the taxable amount: $28,000 × 0.07 = $1,960 in sales tax. Next, find the total loan amount: $28,000 + $1,960 - $5,000 - $3,500 = $21,460. With a 60-month loan and 6% annual interest (0.5% monthly), the monthly payment formula gives approximately $402 per month. Over 60 months, you'll pay about $24,120 total, meaning $24,120 - $21,460 = $2,660 in interest charges.
Practical Tips
- A larger down payment reduces your loan amount and total interest paid—putting down 20% is a common target that can help you avoid being underwater on the loan if the car depreciates quickly
- Compare APR offers from multiple lenders (banks, credit unions, manufacturer financing) before visiting the dealership, since even a 1% difference in rate can save or cost you hundreds of dollars over the loan term
- Use a shorter loan term (36-48 months) if you can afford the higher monthly payment, because you'll pay significantly less interest than with a 72 or 84-month loan, even though monthly payments are higher
- Don't ignore sales tax in your budget—it's often 5-10% of the car's price and gets added to the amount you need to finance, increasing both your monthly payment and total interest
- Check your credit score before applying for a loan since better credit typically qualifies for lower interest rates, and getting pre-approved gives you negotiating power at the dealership
Frequently Asked Questions
What's the difference between APR and interest rate on a car loan?
The interest rate is just the cost of borrowing money, while APR (Annual Percentage Rate) includes the interest rate plus any fees charged by the lender. APR gives you a more complete picture of the true cost of the loan. Always compare APRs when shopping for car loans, not just the stated interest rate.
How much should I put down on a car?
Financial experts generally recommend putting down 10-20% of the vehicle's price. A 20% down payment helps you avoid negative equity and keeps your monthly payment reasonable. However, if you have cash available, putting down more will significantly reduce the amount you need to finance and the total interest you'll pay.
Why does my loan amount seem higher than the car price?
Sales tax is added to the purchase price and then financed as part of your loan. For example, on a $30,000 car with 8% sales tax, you're financing an extra $2,400. This is why calculating your true loan amount before negotiating is important.
Is a 72-month or 84-month loan a good idea?
Longer loan terms lower your monthly payment but result in paying significantly more interest overall—sometimes $3,000-$5,000 extra on a typical loan. Additionally, cars depreciate faster than you pay them down on long-term loans, meaning you could owe more than the car is worth. Consider a 60-month loan or less if possible.
How does my credit score affect my car loan?
Credit scores directly impact the interest rate you qualify for. Borrowers with excellent credit (750+) might qualify for rates under 4%, while those with fair credit (650-700) might pay 8-10% or higher. The difference between a 4% and 8% rate could mean $2,000-$4,000 more in interest over a 60-month loan, making it worth improving your credit before buying if possible.
Sources
- Federal Reserve: Auto Loans and Shopping for the Best Rate
- Consumer Financial Protection Bureau: What You Should Know About Auto Loans
- Kelley Blue Book: How Car Loans Work and How to Get the Best Deal