Auto Loan Calculator

How your car payment is calculated

First the calculator works out the amount financed: the car price, minus your trade-in, plus sales tax on the taxable price, plus fees and any amount you still owe on the trade-in, minus your down payment. The monthly payment then uses the standard loan formula M = P × r ÷ (1 − (1 + r)−n), where r is the APR ÷ 12 and n the number of months.

Example: $35,000 car, $5,000 down, 6.5% for 60 months

With 6% sales tax ($2,100) rolled into the loan, you finance $32,100. The payment is $628.07 a month, and over five years you pay about $5,584 in interest. Paying the tax upfront instead would drop the payment to $586.98.

Stretching the same $30,000 to 72 months lowers the payment from $587 to $504, but interest rises from about $5,219 to $6,309, and you are "upside down" (owing more than the car's value) for longer.

Tips for a cheaper car loan

• Get pre-approved by a bank or credit union before visiting the dealer, so you have a rate to beat.
• Negotiate the price, not the payment. A dealer can hit any monthly payment by stretching the term.
• Watch for add-ons like extended warranties and paint protection rolled into the loan; you pay interest on them too.
• Check the total cost of ownership: insurance, fuel and maintenance. Our gas cost calculator helps with fuel.

Frequently asked questions

What is a good car loan term?

Keep it to 60 months or less if you can. Longer 72- and 84-month loans lower the payment but cost more interest and leave you owing more than the car is worth for longer.

Is sales tax included in a car loan?

Usually yes: dealers roll sales tax, title and registration fees into the amount financed unless you pay them upfront. In most states a trade-in also reduces the price that sales tax is charged on.

How much car can I afford?

A common guideline is the 20/4/10 rule: put 20% down, finance for no more than 4 years, and keep total car costs (payment, insurance, fuel) under 10% of gross income.

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