Auto Loan Calculator

Say you're buying a $35,000 car with $5,000 down and a $3,000 trade-in, in a state with 7% sales tax, financed at 7.5% APR over 60 months. Sales tax is charged on the price minus the trade-in ($32,000 × 7% = $2,240), so the amount you actually finance is $35,000 − $5,000 − $3,000 + $2,240 = $29,240. That works out to about $586 per month, with roughly $5,900 in total interest over the life of the loan. This auto loan calculator handles all of those moving parts at once so you see the real number before you sign.

How the monthly payment is calculated

Once the amount financed is known, the monthly payment uses the standard amortization formula:

where P is the amount financed, r is the monthly interest rate (APR ÷ 12), and n is the number of monthly payments (the term in months). Each payment is split between interest (charged on the remaining balance) and principal, so early payments are mostly interest and later payments are mostly principal - exactly what the amortization table on this page shows.

How sales tax and trade-ins work

In most US states, your trade-in lowers the taxable amount: you pay sales tax only on the difference between the vehicle price and the trade-in value. On a $35,000 car with a $3,000 trade-in at 7%, that saves you $210 in tax versus being taxed on the full price. A few states - including California and Virginia - tax the full purchase price regardless of trade-in, so check your local rule and adjust the tax rate or trade-in field accordingly.

Loan term: shorter vs longer

The term has a big effect on both the monthly payment and the total interest. Stretching a loan to 72 or 84 months lowers the monthly payment but means you pay interest for longer and risk being underwater - owing more than the car is worth - because vehicles depreciate fastest in their first few years. A 36 to 48 month term costs more each month but saves a meaningful amount of interest and builds equity faster. Switch the term in the calculator to compare, and if you are still narrowing down a budget, the Car Affordability Calculator works backward from your income to a sensible price range.

Lower your car payment

• Bigger down payment or trade-in: directly cuts the amount financed and the interest you pay.
• Better APR: get pre-approved by your bank or credit union, then let the dealer try to beat it.
• Shorter term: raises the monthly payment but lowers total interest and avoids being underwater.
• Skip the add-ons: extended warranties and gap insurance financed into the loan accrue interest too.

How to use this calculator

You only need a few numbers to get an accurate estimate. Work through the fields in order:

1. Vehicle price: enter the negotiated, out-the-door price before tax - the number you actually agreed to, not the sticker.
2. Down payment: the cash you put in at signing. More here lowers everything downstream.
3. Trade-in value: what the dealer credits for your old car. In most states this also reduces the taxable amount.
4. Sales tax rate: your combined state and local rate. Many counties add a local surtax on top of the state rate.
5. APR and term: the rate you have been quoted and how many months you will pay. Try a couple of terms to compare.

The result updates instantly, showing your monthly payment, the amount financed, total interest, the total of all payments, and a year-by-year amortization schedule you can scroll through. If you only have a target monthly figure in mind rather than a price, start with the Car Payment Calculator and then return here to price a specific deal.

A second worked example: a used car with no trade-in

Suppose you finance a $22,000 used SUV with $2,000 down, no trade-in, in a state with 6% sales tax, at 9% APR over 48 months. Tax is charged on the full $22,000 (6% = $1,320) because there is no trade-in to subtract. The amount financed is $22,000 − $2,000 + $1,320 = $21,320, giving a monthly payment of roughly $531 and about $4,150 in total interest. Stretch the same loan to 72 months and the payment drops to about $384, but total interest climbs past $6,300 - the classic trade-off between a comfortable monthly number and a lower lifetime cost.

Scenario comparison: same car, different choices

Using the same $35,000 car at 7.5% APR as a baseline, here is how three common decisions change the monthly payment and the total interest you pay over the life of the loan (down payment and trade-in held constant at $5,000 and $3,000, 7% tax):

• 48-month term: about $707/month, with roughly $4,700 in total interest - the highest monthly cost but the cheapest overall.
• 60-month term: about $586/month, with roughly $5,900 in total interest - the middle-ground most buyers choose.
• 72-month term: about $505/month, but total interest climbs to around $7,100, and you spend much longer underwater on a depreciating asset.

The pattern is the same one you see on a home loan or any other installment debt: a longer term buys a smaller monthly number at the price of a much larger lifetime cost. Stretching from 48 to 72 months on this car saves about $200 a month but costs roughly $2,400 more in interest. The headline APR matters, but the term you accept often moves your total cost more than a fraction of a point on the rate.

New vs used: how the financing differs

Whether you buy new or used changes more than just the price. New cars usually qualify for the lowest advertised APRs, including manufacturer-subsidized promotional rates (sometimes 0% for top-tier credit), but they lose the largest share of their value in the first two to three years, so a small down payment leaves you underwater quickly. Used cars cost less up front and have already absorbed the steepest depreciation, but lenders treat them as riskier collateral, so the APR is typically a point or two higher and the maximum term may be shorter. Certified pre-owned vehicles sit in between, often with rates closer to new-car financing. Run the same down payment and term through the calculator at both a new-car rate and a used-car rate to see how much that APR gap actually costs you over the loan.

Dealer financing vs bank or credit union

You generally have two ways to fund a car: borrow directly from a bank or credit union, or take the dealer's financing. Direct lending means you get pre-approved before you shop, so you walk in knowing your rate and your maximum amount - and you can treat the car purchase as a cash deal. Dealer financing is convenient and sometimes unbeatable when the manufacturer is subsidizing the rate, but the dealer can mark up the underlying rate it secures from a lender and keep the difference. The smart move is to get pre-approved first, then let the dealer try to beat your rate; if they can, you win, and if they cannot, you already have a solid offer in hand. Compare any dealer quote against your pre-approval here by entering each APR in turn. For non-vehicle borrowing the trade-off looks similar, which is why a general Loan Calculator or a Personal Loan Calculator uses the same amortization math under the hood.

Refinancing an existing auto loan

If rates have dropped since you bought, or your credit score has improved, refinancing can lower your APR and your monthly payment on a loan you already have. Refinancing replaces your current loan with a new one - ideally at a lower rate or a shorter term - and is most worthwhile early in the loan, when most of your payment is still going to interest. Watch two things: extending the term to shrink the payment can quietly increase your total interest, and a car that has depreciated below the loan balance (negative equity) is harder to refinance. To estimate a refinanced payment, enter the current payoff balance as the vehicle price, set the down payment and trade-in to zero, and plug in the new APR and remaining term.

Leasing vs buying: a quick orientation

This calculator prices the financing path, where you borrow, pay fixed installments, and own the car at the end. Leasing is a different model: you pay for the vehicle's depreciation over a fixed term plus a rent charge, which usually means a lower monthly payment, but you return the car, never build equity, and face mileage limits and wear-and-tear charges. Buying tends to win when you keep cars for many years and drive a lot of miles; leasing can make sense if you want a newer car every few years and stay within the mileage cap. To compare the two side by side, run the same vehicle through the Car Lease Calculator, then weigh the lower lease payment against the equity you would build by financing.

Key terms explained

• Principal / amount financed: the balance you borrow, on which interest is charged.
• APR: the annual percentage rate - the interest rate plus certain financing fees, expressed yearly.
• Term: the loan length in months; common terms are 36, 48, 60, 72 and 84 months.
• Amortization: the process of paying off the loan in equal installments, with the interest/principal split shifting over time.
• Underwater (or upside-down): owing more than the car is currently worth.
• Out-the-door price: the total you pay including tax, title, registration and dealer fees.

Who this calculator is for

It is built for anyone weighing a car purchase: a first-time buyer trying to set a realistic budget, a shopper comparing dealer financing against a bank or credit union pre-approval, or someone deciding between a new and a used vehicle. Because it separates the amount financed from tax and trade-in, it is also useful when you want to see exactly how a bigger down payment or a shorter term changes the math before you ever set foot on a lot. If you are still deciding how much car your income can support, pair it with an affordability or car-payment calculator first, then come back here to price a specific deal.

What affects the APR you are offered

The APR is the single biggest lever on your total cost, and several factors push it up or down:

• Credit score: the dominant factor. Prime and super-prime borrowers see the lowest rates; subprime borrowers can pay several points more.
• New vs used: used cars almost always carry higher rates because they are riskier collateral and depreciate less predictably.
• Loan term: longer terms usually come with higher rates, compounding the extra interest you pay over time.
• Down payment: more money down reduces the lender's risk and can earn a slightly better rate.
• Lender type: credit unions and direct bank loans often beat dealer markup financing, though manufacturer-subsidized promotional rates can be lower still on new cars.
• Debt-to-income and history: a steady income and a clean payment history reassure the lender and help your rate.

Because a single point of APR can change your total interest by hundreds of dollars, it pays to shop at least two or three lenders before you sign and to enter each quoted rate here to compare.

Reading the amortization schedule

The year-by-year table shows how each payment splits between interest and principal. In the first months, most of your payment covers interest because it is charged on a large remaining balance; as the balance falls, more of each payment chips away at principal. That is why paying a little extra early - when the balance is highest - saves the most interest, and why a car you sell or trade in during the first year or two may leave you owing close to the original amount. Watching the balance line drop in the schedule makes the cost of a long term, or the benefit of a bigger down payment, immediately visible.

Financing vs leasing vs paying cash

Financing spreads the full purchase over fixed payments and you own the car outright at the end - the right fit if you keep vehicles for many years. Leasing usually has a lower monthly payment because you only pay for the depreciation during the lease term, but you return the car and never build equity, and mileage limits apply. Paying cash avoids interest entirely and is the cheapest option overall, though it ties up savings that might earn more elsewhere. This calculator covers the financing path; use the related lease and affordability tools to compare the alternatives side by side.

Limitations and assumptions

This is an estimate built on a few simplifying assumptions. It uses a fixed APR for the entire term and a single sales-tax rate, and it applies the common trade-in tax credit - which a handful of states do not offer. It does not add dealer documentation fees, title and registration, or optional products such as extended warranties and gap coverage, all of which raise your out-the-door cost. Your real APR depends on your credit and the lender, and dealer "manufacturer rebate" or 0% promotional offers follow different rules. Treat the result as a close planning figure, then confirm the exact numbers on your final contract.

Sources

• Consumer Financial Protection Bureau - Auto Loans
• CFPB - Interest rate vs. APR
• Federal Trade Commission - Financing or Leasing a Car