How to use this car loan calculator
- Vehicle price — the agreed price of the car before tax and fees, after any discount.
- Down payment — the cash you put in at signing.
- Trade-in value and amount still owed — what the dealer gives you for your current car, and what is left on its loan. Leave the second box at 0 if your car is paid off.
- Sales tax — your local rate. Tick the box if tax is charged on the price minus the trade-in; untick it if it is charged on the full price.
- Fees — title, registration and dealer documentation fees. Tick the box if you are adding them to the loan instead of paying them upfront.
- APR and loan term — the annual percentage rate on your loan offer and the number of months.
The results update as you type. The compare loan terms table shows the same loan over 36 to 84 months, and the amortization schedule shows how your balance falls each year. For a loan without a trade-in or tax, the general loan calculator also works.
How the amount financed and payment are calculated
The amount you borrow is not the sticker price. Sales tax and any financed fees are added, and your down payment and trade-in equity are taken off. The calculator then applies the standard amortized loan formula:
Sales tax is added to the loan. If you plan to pay the tax in cash, add it to your down payment instead. When the tax box is ticked, the full trade-in value comes off the taxable price, whether or not you still owe money on that car.
Worked example
These are the calculator’s default inputs: a $32,000 car, $4,000 down, a trade-in worth $6,000 with $2,500 still owed on it, 6% sales tax charged after the trade-in credit, $850 of fees paid upfront, and an illustrative 6.8% APR over 60 months.
- Taxable price: $32,000 − $6,000 = $26,000, so sales tax is $26,000 × 6% = $1,560.
- Trade-in equity: $6,000 − $2,500 = $3,500.
- Amount financed: $32,000 + $1,560 − $4,000 − $3,500 = $26,060.
- Monthly payment: $513.56 for 60 months. The first month’s interest is $26,060 × 0.068 ÷ 12 = $147.67, so $365.89 of that first payment reduces the balance.
- Total interest: $4,753.82, so you repay $30,813.82 in all.
- Total cost of the car: $4,000 down + $30,813.82 of payments + $850 of fees = $35,663.82.
The total cost counts the cash you pay. It does not count the $3,500 of trade-in equity you hand over, which is value you already owned.
Negative equity: owing more than your trade-in is worth
If you owe more on your current car than the dealer will give you for it, the difference is called negative equity. It does not disappear when you trade the car in. The dealer pays off your old loan, and the shortfall is usually added to the new one, so you pay interest on debt from a car you no longer own.
In the example, suppose you owed $8,500 on the $6,000 trade-in. Your equity becomes −$2,500, and the amount financed rises from $26,060 to $32,060. The payment goes from $513.56 to $631.81, and total interest from $4,753.82 to $5,848.34. If you can, pay down the old loan or cover the shortfall in cash before you trade in.
Longer terms: a lower payment, more interest
For the same $26,060 at 6.8%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $802.28 | $2,821.95 |
| 48 months | $621.62 | $3,777.95 |
| 60 months | $513.56 | $4,753.82 |
| 72 months | $441.80 | $5,749.50 |
| 84 months | $390.77 | $6,764.87 |
Stretching from 60 to 84 months lowers the payment by $122.79 but adds $2,011.05 of interest. A long term also repays the balance slowly, so you can owe more than the car is worth for longer, which is how negative equity builds up for your next trade-in. Some lenders charge a higher rate on longer terms too, so ask for a quote at each term rather than assuming the rate stays the same.
What this calculator does not include
- Optional add-ons such as extended warranties, service plans or gap insurance. If you finance them, add them to the fees and tick the box.
- Manufacturer rebates. Subtract a rebate from the price, but check whether your area taxes the price before or after it.
- Running costs: insurance, fuel, maintenance and depreciation.
- Fees charged as a percentage, or tax on fees. The calculator applies sales tax to the vehicle price only.
It assumes a fixed rate, equal monthly payments starting one month after purchase, and interest charged monthly on the remaining balance. To understand the payment formula step by step, read how to calculate a loan payment.
Frequently asked questions
Should I add the fees to my car loan?
Only if you need to. In the example, financing the $850 of fees raises the payment by $16.75 to $530.31 and adds $155.06 of interest over 60 months. Paying them upfront is cheaper if you have the cash.
Does my trade-in lower the sales tax?
In many places it does, because tax is charged on the price minus the trade-in value. Where it is not, the tax in the example would be charged on the full $32,000: $1,920 instead of $1,560, for a payment of $520.66. Untick the box to see your figures, and confirm the rule with your dealer or local tax authority.
What rate should I enter?
Use the APR on your loan offer or pre-approval, because it includes most lender fees. Our guide to APR vs. interest rate explains the difference. Rates depend on your credit, the term and whether the car is new or used.
Why is the dealer’s payment different?
The dealer may include add-ons, a different tax or fee figure, or a different rate. Ask for an itemized breakdown of the amount financed and compare each line with the inputs here. The loan contract is the final word.
Can I save my calculation?
Members can save any calculation and reopen it later from their account. The calculator itself is free for everyone, with instant results and no sign-up. See membership.
Results are estimates for educational purposes and are not financial advice. See our disclaimer.