Auto Loan Calculator

How to use the auto loan calculator

Enter the agreed price of the vehicle, your down payment, the loan term and the APR the lender has offered. Then add your local sales tax rate and any title, registration, documentation or dealer fees. If you are trading in a car, enter its value and how much you still owe on it. Leave Include tax and fees in the loan ticked to roll them into the financing, or untick it to pay them in cash at signing.

The calculator shows your monthly payment, the amount financed, the total interest, the cash you need at signing and the full cost of owning the car once interest is included. It also tells you how much you would save with a term 12 months shorter.

How a car payment is calculated

First the calculator works out how much you are actually borrowing:

By default, sales tax is applied to the price minus the trade-in value, which is how most US states treat trade-ins. A few states, and many other countries, tax the full price instead — untick Trade-in reduces the taxable price to model that; in the UK and EU, VAT is normally already included in the sticker price, so set the tax rate to 0. The monthly payment then uses the standard amortization formula:

where L is the amount financed, r the APR ÷ 12 ÷ 100, and n the number of months.

Worked example

You agree a price of $35,000, put $5,000 down, pay 7% sales tax ($2,450) and $500 of fees, and finance everything at 6.9% APR for 60 months. The amount financed is 35,000 − 5,000 + 2,450 + 500 = $32,950.

The monthly payment comes to $650.90. Over five years you pay $6,103.76 in interest, so the car's total cost — price, tax, fees and interest — is about $44,054. The same loan over different terms looks like this:

Moving from 60 to 84 months cuts the payment by about $155, but adds over $2,500 of interest — and longer loans usually carry a higher rate as well, which would make the gap bigger.

Trade-ins and negative equity

If your trade-in is worth more than you owe, the difference acts like extra down payment. If you owe more than it is worth, you have negative equity, and dealers commonly add it to the new loan. That means paying interest on a car you no longer own, and starting the new loan "upside down". Where possible, pay the shortfall in cash or keep the old car until the loan balance is below its value.

Tips for a cheaper car loan

• Get pre-approved by a bank or credit union before visiting the dealer, so you know a competitive rate to beat.
• Negotiate the price, not the payment. A low monthly figure can hide a long term or extras rolled into the loan.
• Put down 10–20% to avoid owing more than the car is worth as it depreciates in the first years.
• Watch dealer add-ons such as extended warranties or paint protection that get bundled into the amount financed.
• Consider total cost of ownership — insurance, fuel and maintenance. Our fuel cost calculator helps with running costs.

Thinking about leasing instead? Compare the numbers with the car lease calculator, and check how the payment fits your overall budget with the debt-to-income ratio calculator.

Figures are estimates; tax and fee rules vary by country, state and dealer, and lenders may calculate interest slightly differently.