Auto Loan Calculator
Estimate the monthly payment on a car loan after sales tax, a trade-in, and a down payment. See how much you actually finance, the total interest, and the full amortization schedule.
Model a car loan
Negotiated price before tax, up to $10,000,000.
Cash you pay up front.
Credit for your current vehicle, applied to the purchase.
Use a rate from 0% through 40%.
Common auto loan terms.
Financing $29,240.00 over this term costs $4,677.47 in interest, for a total loan cost of $33,917.47.
- Amount financed
- $29,240.00
- Sales tax
- $2,240.00
- Total interest
- $4,677.47
- Total cost
- $33,917.47
How an auto loan payment is calculated
The calculator first works out how much you finance: the vehicle price plus sales tax, minus your down payment and trade-in credit. That amount is then repaid with a fixed-rate, level-payment amortization schedule, so each month part of the payment covers interest and the rest reduces principal.
M = P × r(1 + r)n / ((1 + r)n − 1)- M
- Monthly payment
- P
- Amount financed (price + tax − down payment − trade-in)
- r
- Monthly interest rate (annual rate ÷ 12)
- n
- Number of monthly payments (loan term)
Sales tax is applied to the vehicle price minus the trade-in value, which reflects how most US states and Canadian provinces tax vehicle purchases. The taxed total, less your cash down payment and trade-in, is the balance you finance.
$35,000 car with $5,000 down and a $3,000 trade-in
A $35,000 vehicle with a $5,000 down payment, a $3,000 trade-in, a 7% sales tax rate, a 6% annual interest rate, and a 60-month term produces $2,240.00 in sales tax on the $32,000 taxable amount. You finance $29,240.00, giving an estimated monthly payment of $565.29. Over the full term, total interest comes to $4,677.47, for a total loan cost of $33,917.47.
This is an educational estimate. Actual offers depend on the lender, your credit profile, dealer fees, registration, and the exact tax rules where you buy.
What this calculator assumes
- Sales tax applies to the vehicle price minus the trade-in value, which varies by state and province.
- The interest rate is fixed for the entire loan term.
- No dealer fees, registration, title, or extended-warranty costs are modeled.
- Payments are made monthly, with interest compounding monthly.
- Money values are rounded to the nearest cent for display.
Understanding the Auto Loan Calculator
A car is one of the biggest purchases most people finance, and the sticker price is only the start. Sales tax, a down payment, and a trade-in all change how much you actually borrow — and therefore the monthly payment. This calculator walks through that arithmetic: it taxes the purchase, subtracts your cash and trade-in, and amortizes what is left into a fixed monthly payment.
It is built to answer the question a dealership rarely puts plainly: given this car, this rate, and this term, what will I pay each month, how much interest will I hand over in total, and what is this loan really costing me?
Who this calculator is for
- New and used car buyerswho want an honest monthly payment before they sit down in the finance office.
- Trade-in ownersseeing how their trade lowers both the amount financed and, in most places, the sales tax.
- Down payment plannerstesting how much cash up front is needed to hit a comfortable payment.
- Rate comparison shopperschecking a dealer's financing offer against a bank or credit union pre-approval.
- Budget-conscious buyersweighing a longer term's lower payment against the risk of owing more than the car is worth.
Why it matters
- It computes the amount financed correctly — price plus tax, minus down payment and trade-in — so the payment is based on what you actually borrow, not the sticker.
- It handles sales tax the way most US states and Canadian provinces do, taxing the price after the trade-in credit, which often lowers your tax bill.
- It shows total interest and total loan cost, so a low monthly payment cannot hide an expensive loan.
- It makes the down payment and trade-in levers concrete, letting you see how each dollar up front reduces the payment and interest.
- It lets you compare a dealer's rate against a bank or credit union pre-approval on identical terms, which is often where real money is saved.
How to use this calculator
- Enter the vehicle price you have negotiated — the out-the-door price before tax is best, since the calculator adds tax separately.
- Enter your sales tax rate for the state or province where you register the vehicle. Tax is applied to the price after the trade-in credit.
- Add your down payment and any trade-in value. Both reduce the amount financed; the trade-in usually reduces the taxable amount too.
- Set the annual interest rate and the term in months (commonly 48, 60, or 72). A longer term lowers the payment but raises total interest.
- Read the amount financed, monthly payment, total interest, and total cost, then adjust any input to compare offers.
How to read your result
The headline figure is the monthly payment on the amount you finance after tax, down payment, and trade-in. The amount financed shown alongside it is the number that actually drives the loan — if it looks high, more cash down or a larger trade-in is the fastest way to bring the payment down. Total interest and total loan cost tell you what the financing itself adds on top of the car.
Pay close attention to the term. Stretching to 72 or 84 months makes almost any car fit a monthly budget, but cars depreciate faster than long loans pay down, so a long term raises the odds of being upside-down — owing more than the vehicle is worth — for much of the loan. Comparing a shorter term's higher payment against its lower total interest and reduced negative-equity risk is exactly what this calculator is for.
- Sales tax rules vary. Most states and provinces tax the price after the trade-in credit, but a few tax the full price regardless — confirm your local rule, since it changes both the tax and the amount financed.
- Dealer add-ons are not modeled here. Documentation fees, registration, title, extended warranties, and gap insurance can add hundreds or thousands to what you actually finance.
- A long term plus a small down payment is how buyers end up upside-down. If the car is worth less than the loan balance, an accident, sale, or trade becomes costly — gap insurance covers the shortfall if the car is totaled, but adds cost.
- Dealer financing is convenient but not automatically the cheapest. A bank or credit union pre-approval gives you a rate to beat and real negotiating leverage; promotional 0% offers sometimes require forgoing a cash rebate.
- The rate is assumed fixed for the whole term, and the payment covers principal and interest only. Your real out-the-door cost includes taxes and fees this tool intentionally keeps separate or excludes.
- Get pre-approved by a bank or credit union before visiting the dealer, then treat the dealer's rate as an offer to beat rather than a default.
- Negotiate the vehicle price first and separately from the monthly payment; a low payment stretched over a long term can hide a high price.
- If a longer term is the only way to afford the payment, consider a cheaper car instead — it lowers the loan, the interest, and the negative-equity risk at once.
Frequently asked questions
How is sales tax handled when I have a trade-in?
In most US states and Canadian provinces, sales tax is charged on the vehicle price after subtracting the trade-in value, so a trade-in lowers both the amount you finance and the tax you owe. A few states tax the full price regardless of a trade-in, so check your local rules — this calculator taxes the price after the trade-in credit.
What does it mean to be upside-down or have negative equity?
Being upside-down (or having negative equity) means you owe more on the loan than the car is currently worth. It is common early in a long loan because cars depreciate quickly while the balance pays down slowly. It becomes a problem if you sell, trade, or total the car before the loan catches up to its value.
How does the loan term affect my auto loan?
A longer term lowers the monthly payment but increases total interest and keeps you in negative equity longer, because the car depreciates faster than the loan pays down. A shorter term costs more per month but less overall and builds equity sooner. This calculator lets you compare terms with your own numbers.
Should I use dealer financing or a bank or credit union?
Dealer financing is convenient and occasionally offers promotional rates, but banks and credit unions are often cheaper. Getting pre-approved elsewhere first gives you a rate to compare and negotiating leverage. Be aware that a promotional 0% dealer offer sometimes requires giving up a cash rebate, so compare the total cost, not just the rate.
Do I need gap insurance?
Gap insurance covers the difference between what you owe and what the car is worth if it is totaled or stolen while you are upside-down. It is most worth considering when you make a small down payment, choose a long term, or buy a fast-depreciating vehicle. If you owe less than the car is worth, it is usually unnecessary.
How can I lower my monthly car payment?
The most direct levers are a larger down payment or trade-in, which reduce the amount financed; a lower interest rate, which you can improve by shopping lenders and your credit; or a longer term, which lowers the payment but raises total interest and negative-equity risk. Buying a less expensive car reduces all three at once.
Sources and review notes
Methodology last checked Jul 14, 2026. Formula implementation is covered by deterministic unit tests. No financial professional review is claimed yet.