How to use the auto loan calculator
- Enter the vehicle price you negotiated, your down payment, and your trade-in details if you have one.
- Add your state's sales tax rate and any fees you plan to roll into the loan.
- Enter the APR you were offered and pick a loan term.
The table at the bottom compares every common term, so you can see how much a longer loan really costs.
How the amount financed is calculated
Financed = Price − Trade-in + Sales tax + Fees − Down payment + Owed on trade-in
Sales tax here is charged on the price minus your trade-in value. The monthly payment then uses the standard loan formula: M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate and n the number of months.
Example: a $35,000 car with $5,000 down, 7% sales tax ($2,450) and $800 in fees means $33,250 financed. At 7% APR for 60 months the payment is about $658 per month, with roughly $6,250 in total interest.
Tips to get a better car loan
- Get pre-approved by your bank or a credit union before visiting the dealer, so you have a rate to beat.
- Negotiate the price first, then discuss financing. Don't negotiate only on the monthly payment.
- Follow the 20/4/10 rule: put 20% down, finance for no more than 4 years, and keep total car costs under 10% of your gross income.
- Watch out for add-ons like extended warranties and gap insurance rolled into the loan. They add interest too.
Frequently asked questions
What is a good loan term for a car?
Many financial experts recommend 60 months (5 years) or less. Longer 72- and 84-month loans lower the payment but cost more interest, and you can end up owing more than the car is worth for years.
Is sales tax charged before or after the trade-in?
In most US states, sales tax is charged on the price after subtracting your trade-in value, which saves you money. A few states tax the full price. This calculator subtracts the trade-in first; set the trade-in to zero for tax purposes if your state doesn't allow the credit.
What if I owe money on my trade-in?
Enter the amount you still owe. If you owe more than the car is worth (negative equity), the difference is added to your new loan, which raises your payment.
What APR can I expect on a car loan?
Rates depend heavily on your credit score, whether the car is new or used, and the loan term. Buyers with excellent credit get the lowest rates, while used cars and lower scores pay noticeably more. Getting pre-approved by a bank or credit union gives you a rate to compare with the dealer's offer.