About the Car Loan Calculator
This car loan calculator shows what you’ll pay each month and how much the loan really costs for a new or used car financed through a bank, credit union or dealer. It accounts for your down payment, trade-in and sales tax rolled into the loan, and compares common loan terms so you can see how much a 72-month loan adds in interest compared with 48 or 60 months.
How to use
- Enter the vehicle price (negotiated price including dealer fees you finance), your down payment and the trade-in value.
- Enter your combined state and local sales tax rate. It is applied to the price minus the trade-in and added to the loan; enter 0 if you pay it upfront.
- Enter the APR from your pre-approval or dealer quote and pick the term to see the monthly payment.
- Use the comparison table to weigh a lower monthly payment against higher total interest.
How the car payment is calculated
Auto loans are simple-interest installment loans with equal monthly payments: payment = P × r × (1+r)n ÷ ((1+r)n − 1), where P is the amount financed, r the APR ÷ 12 and n the number of months.
Example: a $40,000 car with $5,000 down, a $3,000 trade-in and 7% sales tax on $37,000 ($2,590) leaves $34,590 to finance. At 7% APR for 60 months the payment is $684.92 and total interest is about $6,505. Over 72 months the payment drops to $589.73 but interest rises to about $7,870; over 48 months it’s $828.30 with about $5,168 in interest.
Sales tax, trade-ins and fees
- Sales tax: state rates range from 0% (e.g. Delaware, Montana, New Hampshire, Oregon) to over 7%, plus local taxes in many places.
- Trade-in credit: most states charge sales tax only on the price minus the trade-in, which saves you tax on the trade-in value. A few states, such as California, Hawaii and Virginia, give no trade-in credit – in that case add the extra tax to the price.
- Other costs: title, registration and dealer documentation fees vary by state; add them to the price if you finance them.
Tips to pay less interest
- Get pre-approved by a bank or credit union before visiting the dealer and compare the APR with the dealer’s offer.
- Put at least 10–20% down to avoid owing more than the car is worth (negative equity).
- Choose the shortest term you can comfortably afford – a common guideline keeps total car costs under about 10–15% of take-home pay.
- Compare 0% APR deals with cash rebates: the rebate plus a regular loan is sometimes cheaper.
FAQ
Is a 72- or 84-month car loan a good idea?
It lowers the payment, but you pay more interest and are likely to owe more than the car is worth for years. In the example above, 72 months costs about $1,365 more interest than 60 months.
Does the trade-in reduce sales tax?
In most states yes: sales tax is charged on the price minus the trade-in value. This calculator applies the tax that way. If your state doesn’t give a trade-in credit, raise the tax rate slightly or add the extra tax to the price.
Can I calculate 0% financing?
Yes. Enter 0 as the APR and the payment is simply the amount financed divided by the number of months.
Why is my dealer’s quote different?
Dealers may finance fees, extended warranties or GAP insurance, and lenders count interest by actual days. Ask for the amount financed, APR and term on the buyer’s order and enter those numbers.