Estimate your monthly car payment, including sales tax, your down payment, trade-in value, and fees, and see how extra payments could shorten the loan.
Many states tax the vehicle price after subtracting your trade-in value. Set the tax rate to 0 if your state taxes differently or you want a pre-tax estimate.
Your loan amount is the vehicle price, minus your down payment and trade-in value, plus sales tax and any fees you choose to finance. Sales tax is calculated on the price after your trade-in credit is subtracted, which is how many states with a trade-in tax credit handle it, though rules vary, so check your local DMV or dealer if you need an exact figure. From there, the monthly payment uses the standard loan amortization formula, spreading the loan amount and interest evenly across your chosen term.
The results also show your total cost including the down payment, and the loan as a percentage of the vehicle price. If you enter an extra monthly payment, the calculator shows how much sooner you would finish and how much interest you would save.
If you are financing something other than a vehicle, the Personal Loan Calculator uses the same payment math without the sales tax and trade-in fields.
For a $32,000 vehicle with a $3,000 down payment, a $2,000 trade-in, 7% sales tax, a 6.5% APR, and a 60-month term: the taxable amount is $30,000 (price minus trade-in), sales tax comes to $2,100, and the total loan amount is $29,100. That works out to a monthly payment of $569.37, total interest of $5,062.49, and a total cost of $34,162.49 over the life of the loan. Adding the $3,000 down payment, you pay $37,162.49 in cash over the loan, plus the value of your trade-in. The loan is 90.9% of the vehicle price.
Stretching a loan lowers the monthly payment but raises the total interest. For the same $29,100 loan at 6.5%:
Going from 60 to 84 months lowers the payment by about $137 a month but adds roughly $2,135 in interest. Long loans also raise the risk of negative equity, which is owing more than the vehicle is worth, because cars lose value faster than a long loan balance falls.
On the same loan over 60 months, a 4.5% APR gives a payment of $542.51 and $3,450.71 in interest. At 6.5% the payment is $569.37 with $5,062.49 in interest. At 8.5% it is $597.03 with $6,721.86, and at 10.5% it is $625.47 with $8,428.35. Your credit score has a large effect on the rate you are offered. It often pays to get a quote from your own bank or credit union before visiting a dealer, so that you can compare it with the dealer's financing offer.
A larger down payment reduces your loan and everything that follows from it. Raising the down payment from $3,000 to $6,400, which is 20% of the price, drops the loan to $25,700, lowers the payment by about $66.52 to $502.85, and cuts total interest to $4,471.00. A trade-in helps in two ways. It reduces the amount you finance, and in states that give a trade-in tax credit it also lowers the sales tax. In the example, the $2,000 trade-in saves $140 in tax, since 7% of $2,000 is $140.
Paying more than required goes straight to principal and reduces interest. On the example loan:
Before paying extra, confirm that your lender applies additional payments to principal and does not charge a prepayment penalty.
Registration, title, and dealer documentation fees are often rolled into the loan. Financing $500 of fees in the example raises the loan from $29,100 to $29,600 and the payment to $579.16, about $9.79 more each month, and you also pay interest on those fees. Paying fees up front, when you can, avoids that extra interest. Watch out for add-ons such as extended warranties, which can also be added to the loan and increase your cost.
Used car loans usually carry higher rates than new car loans, though the vehicle costs less. As an example, an $18,000 used car with $2,000 down, no trade-in, 7% sales tax, and a 9.5% APR over 60 months has a loan of $17,260, a payment of $362.49, and total interest of $4,489.53. Always enter the rate you are actually offered rather than a new-car rate.
A commonly cited guideline is the 20/4/10 rule: put down at least 20%, finance for no more than 4 years, and keep total vehicle costs, including the payment, insurance, and fuel, under about 10% of your gross income. It is a conservative benchmark, and many buyers use longer loans, but it shows how quickly a car can strain a budget. For example, $32,000 with 20% down, 7% sales tax, and a 6.5% APR over 48 months is a $27,840 loan and a payment of $660.22.
Lenders also check your debt-to-income ratio with the new payment included. Our guide on what DTI you need for a car loan shows how to work out the largest payment your ratio allows and what car price it buys, and the DTI calculator gives you your current ratio.
The calculator does not include insurance, fuel, maintenance, or registration, so add those to the payment when you plan your budget. Check the total against your income with the budget calculator and the debt-to-income calculator, and use the savings goal calculator if you are saving for a bigger down payment. If you carry credit card debt, see the Credit Card Payoff Calculator.
How is sales tax handled in this calculator?
It assumes your state taxes the vehicle price after subtracting your trade-in value, which is common but not universal. If your state taxes the full price regardless of trade-in, or doesn't apply sales tax to vehicles at all, set the tax rate to 0 and add any tax separately, or check with your dealer for the exact rule where you live.
Should I include my trade-in value?
Yes, if you are trading in a vehicle. It reduces both the amount you need to finance and, in most states, the amount that gets taxed, which lowers your monthly payment on two fronts.
What loan term should I choose?
Shorter terms mean higher monthly payments but less total interest paid. Longer terms lower the monthly payment but increase the total interest, sometimes substantially. An 84-month loan can cost far more in interest than a 60-month loan for the same amount.
Does this include registration, title, or dealer fees?
Only if you enter them. Use the optional fees field for any registration, title, documentation, or other fees you plan to roll into the loan. Fees you pay up front don't need to be entered.
Why is the total interest so much higher on longer loan terms?
Interest accrues on whatever balance remains, for as long as it remains. A longer term keeps a larger balance outstanding for more months, so even at the same interest rate, total interest paid grows significantly as the term stretches out.
Is the interest rate here the same as the APR a dealer quotes?
It should be. Enter the APR (annual percentage rate) you are quoted or expect to qualify for. Dealer financing sometimes includes markups over the rate a lender actually offers, so it can be worth comparing a dealer's APR against a quote from your own bank or credit union.
Can I use this for a used car loan?
Yes, the math is identical. Used car loans typically carry higher interest rates than new car loans, so make sure the APR you enter reflects what you are actually being offered rather than a new-car rate.
What is negative equity, and how can I avoid it?
Negative equity means you owe more on the loan than the car is worth. It is more likely with a small down payment, a long term, or fees and add-ons rolled into the loan, because the car loses value faster than the balance falls. The "loan as % of vehicle price" row helps you spot it: the higher it is, especially above 100%, the greater the risk. A larger down payment and a shorter term reduce it.