Auto loan

Auto Loan Calculator

Most car-loan calculators ignore the line items the dealer slips in. This one bakes sales tax, trade-in, and fees into the real monthly payment — drag a slider to see the impact.

How the auto loan calculator works

Most online car payment calculators ask for one number — the loan amount — and return a monthly payment. That's fine for a napkin estimate, but it leaves out everything the dealer adds at the closing table. This calculator builds the financed amount the way lenders actually do: vehicle price minus your down payment, minus any trade-in credit, plus sales tax on the taxable amount, plus documentation and dealer fees. The result is the true principal that gets amortized over your loan term.

Amortization means each monthly payment is split between interest (charged on the remaining balance) and principal (which reduces what you owe). In the early months most of your payment is interest; by the final months almost all of it is principal. That math is fixed by the standard amortization formula — there's no trick to changing it other than paying extra principal or refinancing at a lower rate.

Because this calculator includes tax, trade-in, and fees, the monthly payment it shows will almost always be higher than what a simple calculator returns for the same sticker price. That gap is exactly what catches buyers off guard at the dealership. Use the inputs above to model your specific situation before you walk in.

The formula

M = P × r(1+r)^n / ((1+r)^n − 1)

M = monthly payment
P = principal (financed amount)
r = monthly interest rate (APR ÷ 12)
n = number of payments (term in months)

The principal P is calculated as: vehicle price − down payment − trade-in value + (taxable amount × sales tax rate) + fees. In most U.S. states the taxable amount is price minus trade-in, which is why a trade-in can save you real money beyond just reducing the loan — it shrinks the tax bill too.

Worked example

Say you're buying a car listed at $32,000 with a $5,000 down payment, no trade-in, a 7% state sales tax, and $500 in doc fees. Your lender offers 6.9% APR over 60 months.

Step 1 — financed amount: $32,000 − $5,000 + ($32,000 × 7%) + $500 = $32,000 − $5,000 + $2,240 + $500 = $29,740.

Step 2 — monthly rate: 6.9% ÷ 12 = 0.575% = 0.00575.

Step 3 — apply the formula: M = 29,740 × 0.00575 × (1.00575)^60 / ((1.00575)^60 − 1) ≈ $589/month. Total paid over 60 months: $35,340. Total interest: roughly $5,600 (of which $2,240 was tax, so pure financing cost is ~$3,360).

Stretch the same loan to 72 months and the payment drops to ~$507 — but total interest climbs to ~$6,800 and you're likely underwater on the car for the first three years.

When to use this calculator

Before visiting a dealer — know your real monthly budget so you can't be steered by payment-focused sales tactics.
Comparing new vs used — plug in both scenarios including the different tax treatment and insurance costs to find the true cost difference.
Deciding on term length — see exactly how much extra interest a 72- or 84-month loan costs compared to 60 months.
Evaluating a trade-in offer — in most states, trading in reduces your taxable amount, so a dealer's trade-in offer is worth more than face value.
Refinancing an existing loan — use the current payoff balance as the vehicle price and $0 down to model a refi payment, then compare to the refinance calculator.

Key concepts

APR (Annual Percentage Rate): APR is the yearly cost of borrowing expressed as a percentage. For auto loans it typically equals the interest rate — unlike mortgages, auto loans rarely have points or origination fees rolled into APR. A lower APR always means a lower total cost; even 0.5% matters over 60 months.
Amortization: The process of paying off a loan through equal periodic payments where each payment covers that period's interest first, then reduces the principal. Early in a loan, most of each payment is interest; this flips toward the end. You can see this in the payment breakdown this calculator produces.
LTV (Loan-to-Value): LTV is the loan balance divided by the car's market value, expressed as a percentage. Most lenders cap auto loans at 100–125% LTV. High LTV means you're "underwater" — you owe more than the car is worth — which matters if the car is totaled or you need to sell. A larger down payment reduces LTV immediately.

Common mistakes

Focusing only on the monthly payment. Dealers love to negotiate payments because they can hide a higher price, longer term, or add-ons behind a number that fits your budget. Always negotiate the out-the-door price first.
Rolling negative equity into a new loan. If you owe more on your trade-in than it's worth, dealers will often fold that gap into the new loan — giving you a higher balance from day one and compounding the problem.
Skipping pre-approval. Walking into a dealership without a competing loan offer gives the finance office full control over your rate. A bank or credit union pre-approval takes 15 minutes and gives you real negotiating power.
Taking an 84-month loan to afford a car. If you need 84 months to make payments fit, the car is likely outside your budget. The total interest on a 7-year loan can exceed what you'd pay for an entry-level vehicle outright.
Forgetting GAP insurance on a heavily financed vehicle. Comprehensive/collision insurance pays market value if the car is totaled — not what you owe. On a new car with a small down payment you can be $5,000+ underwater immediately. GAP covers that difference.

Frequently asked questions

What's a good interest rate for a new vs used car?

As of 2026, excellent-credit borrowers (750+ FICO) typically see 4–6% APR on new cars and 6–8% on used. Rates rise sharply below 680. Credit unions consistently beat dealer financing by 0.5–1.5 percentage points, so get pre-approved before visiting any showroom — even if you end up using dealer financing, you'll have a benchmark to negotiate against.

How does my down payment affect total loan cost?

Every dollar down reduces the principal, which means you pay interest on a smaller balance for the entire term. On a 60-month loan at 6.9%, an extra $3,000 down saves roughly $500 in interest and gets you to positive equity (owing less than the car is worth) months sooner. In states that tax the full purchase price, a larger down payment also doesn't help with tax — but in most states, trade-in credit reduces the taxable amount, which is why trading in a car is often financially smarter than selling privately and using cash.

What are the real trade-offs between 60, 72, and 84-month loans?

A $27,000 loan at 6.9% over 60 months costs about $2,200 in total interest. At 72 months you pay $2,900 — saving ~$50/month but spending $700 more overall. At 84 months total interest exceeds $3,600 and you're likely underwater for 3+ years. The longer term also means you're still paying off a car that may need significant repairs in years 6–7. The monthly savings feel real but the math rarely favors anything beyond 60 months.

Should I refinance my existing auto loan?

Refinancing makes sense when rates have dropped since you bought, your credit score has improved significantly (70+ point jump), or you took dealer financing without shopping around. The break-even is typically 3–6 months of payment savings versus any refinance fees. One caveat: refinancing resets your loan term, so make sure the new payment schedule doesn't cost more in total interest even at a lower rate. Use the refinance calculator to compare.

Is GAP insurance worth it?

GAP (Guaranteed Asset Protection) covers the difference between your loan payoff and the car's actual cash value if it's totaled or stolen. It's most valuable in the first 24–30 months of ownership when depreciation outruns your principal paydown — especially if you put less than 20% down or financed at 72+ months. Dealer GAP is often $600–$900 marked up. Check your auto insurer first; many offer it for $20–$30/year added to your policy.

Should I use dealer financing or a bank / credit union?

Get pre-approved by your bank or credit union before stepping onto the lot. Knowing your rate removes one negotiation variable and makes it much harder for the finance office to inflate your APR. Dealers can occasionally beat your rate through manufacturer incentive programs (especially 0% promotional offers on new cars), but those are uncommon on used vehicles. If the dealer can match or beat your pre-approval, great — use whichever is lower. Never let the dealer "shop" your credit to multiple lenders without asking how many hard pulls that creates.

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This tool is for educational purposes only and does not constitute financial advice. Rates and tax rules vary by lender and state — verify details with your financial institution before making a borrowing decision.