Car Loan Calculator

A car loan calculator first works out the amount financed (price − rebate + sales tax + fees − down payment − trade-in equity), then applies M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1). For a $35,000 car with $30,405 financed at an example 7% APR for 60 months, the payment is $602.06 a month.

How to use the car loan calculator

1. Choose Monthly payment to price a specific car, or How much car can I afford? to start from the payment that fits your budget.
2. Enter the vehicle price (or your monthly budget), your cash down payment, and, for a trade-in, its value and what you still owe on it.
3. Pick a term (36 to 84 months, or Other) and type the APR from your own offer. The 7% shown is only an example.
4. Enter your combined state and local sales tax rate and choose whether tax is charged on the price minus the trade-in or on the full price.
5. Add any rebate and fees, and say whether tax and fees are financed or paid at signing.

For a plain loan without car costs, or to see what extra payments save, use the loan calculator.

Auto loan formula: from sticker price to monthly payment

A car loan payment is found in two stages. First, work out how much you borrow:

Amount financed = price − rebate + sales tax + fees − down payment − trade-in equity

Trade-in equity is the trade-in value minus what you still owe on that car. If you owe more than the car is worth, equity is negative, and subtracting a negative number adds it to the loan. If you pay the tax and fees in cash, leave them out of this line.

Second, turn the amount financed into a monthly payment:

M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

• M is the monthly payment.
• P is the amount financed.
• r is the monthly rate: the APR as a decimal, divided by 12.
• n is the number of monthly payments (the term in months).

At 0% APR the formula divides by zero, so the payment is simply P ÷ n.

Worked example: a $35,000 car with a trade-in

You buy a $35,000 car with a $1,000 rebate. You put $3,000 down and trade in a car worth $8,000 that still has $5,000 owing. Sales tax is 6.5% on the price minus the trade-in, fees are $400 (dealer and doc) plus $250 (title and registration), and everything is financed for 60 months at an example APR of 7%.

1. Taxable price: 35,000 − 8,000 = $27,000. Sales tax: 27,000 × 0.065 = $1,755.00.
2. Out-the-door price: 35,000 − 1,000 + 1,755 + 650 = $36,405.00.
3. Trade-in equity: 8,000 − 5,000 = $3,000.
4. Amount financed: 36,405 − 3,000 − 3,000 = $30,405.00.
5. Monthly rate: r = 0.07 ÷ 12 ≈ 0.0058333, and n = 60, so (1 + r)⁶⁰ ≈ 1.417625.
6. Payment: M = 30,405 × 0.0058333 × 1.417625 ÷ 0.417625 ≈ $602.06.

In month one, interest is 30,405 × 0.0058333 ≈ $177.36, so $424.70 of the first payment reduces the balance. Over the 60 payments you pay $5,718.27 in interest, and the total cost of the car is $36,405.00 + $5,718.27 = $42,123.27. The last payment is $601.73 because the regular payment was rounded to the cent.

Sales tax and your trade-in

States handle trade-ins differently. Many charge sales tax only on the price minus the trade-in value; others tax the full price. Rebates vary too: some states tax the price before the rebate, others after it. Rules change, so the calculator lets you choose the option that matches your contract.

The choice matters. In the example, tax on the full $35,000 would be $2,275.00 instead of $1,755.00. Financed, that $520 difference raises the payment by $10.29 a month, to $612.35.

Car loan term comparison: 36 to 84 months

Here is the same $30,405 at the same 7% APR over each common term.

Going from 36 to 84 months cuts the payment by $479.93 but adds $4,749.61 in interest. The Consumer Financial Protection Bureau makes the same point: a longer term may mean smaller payments, but you will pay more in interest. In its example, a $20,000 loan at 4.75% costs $1,498 in interest over three years and $3,024 over six, more than twice as much. The CFPB also warns that longer loans are more likely to leave you owing more than the vehicle is worth.

Negative equity: rolling an old loan into a new one

If you owe more on your trade-in than it is worth, the difference is called negative equity. A dealer may offer to roll it into the new loan. The CFPB notes that this makes the new loan more expensive and increases the interest you pay.

Change the example so that $11,000 is owed on the $8,000 trade-in. Equity is now −$3,000, so the amount financed rises from $30,405 to 36,405 − 3,000 down + 3,000 negative equity = $36,405.00. The payment becomes $720.86, which is $118.80 more each month, and total interest rises by $1,128.47 to $6,846.74. You also start the new loan owing more than the car’s price after the rebate (the CFPB calls this a loan-to-value ratio above 100 percent). If the car is sold or written off early, the money may not cover what you owe.

How much car can I afford?

The affordability tab runs the formula backwards. The largest loan a payment supports is P = M × (1 − (1 + r)⁻ⁿ) ÷ r. With $550 a month for 60 months at 7%, that is $27,776.09. The calculator then works back through the down payment, trade-in, tax and fees to the highest vehicle price that keeps the amount financed at or under that figure: $32,531.54 with the example’s other numbers. Insurance, fuel and maintenance also come out of your budget.

APR vs interest rate

The CFPB explains that the interest rate is the cost of borrowing the money, while the APR is the interest rate plus any additional fees charged by the lender. Enter the APR in the calculator and compare offers APR to APR. The CFPB adds that the APR, term, trade-in value, add-ons and dealer fees such as document fees can be negotiated, but taxes, title and registration fees set by your state cannot.

Monthly payment per $10,000 financed

Scale these figures to your own loan: for $30,000, multiply by 3.

Common car loan mistakes

• Shopping by monthly payment alone. A longer term makes almost any car look affordable.
• Forgetting tax and fees. Financing $2,405 of tax and fees on the example car adds about $47.62 a month at 7% over 60 months.
• Counting the full trade-in value. Only the equity (value minus what you owe) lowers the loan.
• Treating an example rate as an offer. Your APR depends on your credit, the lender and the car.

Results are estimates for planning and learning, not financial advice. Your contract may differ because of state tax rules, fees, add-ons and how the lender charges interest.

Sources

• Consumer Financial Protection Bureau: How do I compare auto loan offers?
• Consumer Financial Protection Bureau: Should I trade in my car if it’s not paid off?
• Consumer Financial Protection Bureau: What things can I negotiate when shopping for a car or auto loan?
• Consumer Financial Protection Bureau: What is a loan-to-value ratio in an auto loan?
• Consumer Financial Protection Bureau: What is the difference between a loan interest rate and the APR?

Car loan practice quiz: 10 questions

Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.

Frequently asked questions

How do you calculate a car loan payment?

Find the amount financed (price − rebate + tax + fees − down payment − trade-in equity), divide the APR by 12 to get r, and use M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) with n equal to the term in months. $30,405 at 7% for 60 months gives $602.06.

What is the monthly payment on a $30,000 car loan?

It depends on the APR and term. At 6% it is $579.98 a month over 60 months and $497.19 over 72 months. At 8% it is $608.29 and $526.00. Tax and fees you finance are added to the $30,000 first.

Is a 60-month or 72-month car loan better?

A 72-month loan has a lower payment but costs more interest and keeps you owing more than the car is worth for longer. On $30,405 at 7%, 72 months saves $83.68 a month but adds $1,199.61 in interest. Choose the shortest term you can comfortably afford.

What happens to negative equity when you trade in a car?

The amount you owe beyond the trade-in value still has to be paid. Dealers usually add it to the new loan, which raises the payment and the total interest.

Is sales tax included in a car loan?

Often, yes: many buyers finance tax, title and fees with the car. You can also pay them in cash at signing; untick the financing box in the calculator to compare.

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