How this calculator works
A car loan covers the vehicle price plus sales tax, minus whatever you pay upfront with cash or a trade-in. This calculator adds sales tax on the price after your trade-in (the rule in most states), subtracts your down payment and trade-in, and then works out a fixed monthly payment over your chosen term.
Dealer fees, registration and extended warranties aren't included. If you roll them into the loan, add them to the vehicle price for a more accurate estimate.
The formula
P is the amount financed, r is the APR divided by 12, and n is the number of months.
Example calculation
You buy a $35,000 car with $5,000 down, 6% sales tax, and a 60-month loan at 7% APR.
- Sales tax
- $2,100.00
- Amount financed
- $32,100.00
- Total interest
- $6,037.11
- Monthly payment
- $635.62
Including your down payment, the car costs $43,137.11 in total.
Ways to save
- Get pre-approved first. A bank or credit union rate gives you leverage at the dealership.
- Keep the term short. A 72-month loan has a lower payment but much more interest, and you may owe more than the car is worth.
- Negotiate the price, not the payment. Dealers can hit any monthly number by stretching the term.
- Follow the 20/4/10 rule. Put 20% down, borrow for no more than 4 years, and keep car costs under 10% of your income.
Frequently asked questions
What is a good APR for a car loan?
It depends on your credit score and whether the car is new or used. Borrowers with excellent credit get the lowest rates, while used-car loans and lower scores cost more. Compare at least three lenders.
Is sales tax charged on the trade-in value?
In most states, no. You pay tax only on the price minus the trade-in. A few states, including California, tax the full price.
Should I choose a longer loan for a lower payment?
Only if you have to. Longer loans cost more in interest and increase the risk of owing more than the car is worth.