Auto Loan Calculator

Work out the monthly payment on a car loan and what the car really costs once sales tax, fees, your trade-in and interest are all counted.

The negotiated price before tax and fees.

If you owe more than the trade-in is worth, the difference is usually added to the new loan.

State plus local rate. Charged here on the price minus the trade-in; a few states tax the full price.

Monthly payment
$566.31
Amount financed
$28,600.00
Total interest
$5,378.86
Sales tax
$1,800.00
Total cost of the car
$42,978.86Price + tax + fees + interest
Cash due at signing
$4,000.00
  • Sales tax is 6% of $30,000.00 (price minus trade-in). Rules differ by state: some tax the full price, some cap the tax, and some treat fees, rebates and trade-ins differently. Check your state's motor vehicle or revenue department.

Payment schedule (by year)

YearInterestPrincipalBalance
1$1,845.17$4,950.60$23,649.40
2$1,487.29$5,308.48$18,340.92
3$1,103.54$5,692.23$12,648.69
4$692.05$6,103.72$6,544.96
5$250.81$6,544.96$0.00

How the amount you borrow is worked out

Start with the negotiated price of the car. Subtract the trade-in value and your cash down payment. If you still owe money on the car you're trading in, add that payoff amount back: a trade-in worth $5,000 with $7,000 still owed leaves $2,000 of negative equity that gets folded into the new loan. Then add sales tax and fees if you're financing them rather than paying cash.

Vehicle sales tax rules are set by each state, and often add a local rate on top. In many states a trade-in reduces the taxable amount, so you pay tax only on the price minus the trade-in. That's how this calculator works, but some states tax the full price, and some cap the tax or treat dealer fees and rebates differently, so check your state's revenue or motor vehicle department for an exact figure.

Why the loan term matters so much

Stretching a loan from 60 to 72 or 84 months lowers the payment, which is why dealers often lead with the monthly figure. But you pay interest for longer, longer loans often carry higher rates, and because cars lose value quickly you can spend years owing more than the car is worth. On the default numbers here ($28,600 financed at 7%), a 48-month loan costs $4,273.40 in interest, 60 months costs $5,378.86 and 72 months costs $6,507.31.

A more useful approach is to decide the total you're willing to pay, then see what term makes the payment affordable. If only the longest term works, the car may be more than the budget can carry.

Getting a better deal on the financing

Treat the price, the trade-in and the financing as separate negotiations. The FTC suggests negotiating the APR and payment terms just as you would the price, and leaving the trade-in until after you've settled the price of the new car. Getting preapproved by a bank or credit union before visiting the dealer gives you a rate to compare against the dealer's offer. Ask for the APR, not just the monthly payment, and read the contract for add-ons such as extended warranties, GAP insurance or service plans that may have been rolled into the amount financed.

The auto loan formula

Sales tax = (price − trade-in) × tax rateAmount financed = price − trade-in + amount owed on trade-in − down payment + tax + feesMonthly payment = L × r ÷ (1 − (1 + r)^−n)
  • L = amount financed
  • r = APR ÷ 12, as a decimal
  • n = number of monthly payments

Example: $35,000 car with a trade-in

  1. Price $35,000, trade-in $5,000, cash down $4,000, sales tax 6%, fees $800, all financed at 7% APR for 60 months.
  2. Sales tax: ($35,000 − $5,000) × 6% = $1,800.
  3. Amount financed: $35,000 − $5,000 − $4,000 + $1,800 + $800 = $28,600.
  4. Monthly payment: r = 0.07 ÷ 12, n = 60, so the payment is $566.31.
  5. Total interest: 60 payments of $566.31 come to $33,978.86, minus the $28,600 borrowed = $5,378.86.
  6. Total cost of the car: $35,000 + $1,800 + $800 + $5,378.86 = $42,978.86.

Frequently asked questions

Is it better to put money down on a car?

A down payment reduces what you borrow, so you pay less interest and are less likely to owe more than the car is worth. In the example, each extra $1,000 down cuts the payment by about $19.80 a month over 60 months.

Does a trade-in reduce sales tax?

In many states, yes: tax is charged on the price minus the trade-in value. Some states tax the full purchase price regardless of the trade-in. Check with your state's department of revenue or motor vehicles.

What happens if I owe more on my trade-in than it's worth?

The difference (negative equity) is usually added to the new loan. You pay interest on it and start the new loan owing more than the new car is worth. Enter the amount you still owe to see the effect.

What's the difference between the interest rate and the APR?

The APR includes the interest rate plus certain finance charges, expressed as a yearly rate, so it's the better figure for comparing loan offers. If your lender quotes only a rate, use it here, but ask for the APR.

Should I finance the sales tax and fees?

Rolling them into the loan means less cash at signing but more interest. On the example, financing $2,600 of tax and fees at 7% over 60 months adds about $489 of interest.

Sources

Last reviewed for 2026. How we calculate.