Car Loan Calculator

How to Use This Calculator

1. Enter the vehicle price — the sticker price or the price you've negotiated with the dealer, before taxes and fees.
2. Add your down payment — cash you'll pay upfront. More down means a smaller loan and less interest.
3. Enter your trade-in — the value of the vehicle you're trading in. This reduces both your loan amount and your taxable amount in most states.
4. Set the tax rate and APR — your local sales tax rate and the interest rate from your lender.
5. Pick a loan term — compare 36, 48, 60, and 72 months to see how the term affects your monthly payment and total cost.

Understanding Car Loan Costs

A car loan has three main cost components: the vehicle price, sales tax, and interest. The price is what you negotiate. Sales tax is set by your state and local government. Interest is the cost of borrowing and depends on your credit score, the lender, and the loan term.

Your down payment and trade-in value reduce the amount you need to borrow. A larger down payment means less interest over the life of the loan and a lower monthly payment. In most US states, your trade-in also reduces the taxable amount, saving you additional money on sales tax.

The loan term is one of the biggest levers you have. A 36-month loan on a $30,000 car at 6% costs about $2,800 in interest. Stretch that to 72 months and the interest jumps to about $5,800 — more than double. The monthly payment is lower with a longer term, but the total cost is significantly higher.

Before committing, use this calculator to compare different scenarios. Try adjusting the down payment, term, and rate to find the balance between an affordable monthly payment and a reasonable total cost. And always get pre-approved by your bank or credit union before visiting the dealer — it gives you leverage to negotiate a better rate.

Frequently Asked Questions

How is my car loan monthly payment calculated?

Your monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount (vehicle price + sales tax - down payment - trade-in), r is the monthly interest rate (APR / 12), and n is the number of monthly payments. This produces fixed payments that fully pay off the loan by the end of the term.

What loan term should I choose for a car?

Shorter terms (36-48 months) cost more per month but save significantly on total interest. Longer terms (60-72 months) lower the monthly payment but increase total cost. Most financial advisors recommend 48-60 months for new cars and 36-48 months for used cars. Avoid terms beyond 72 months — the interest adds up and you risk owing more than the car is worth.

How does a trade-in reduce my sales tax?

In most US states, sales tax is calculated on the vehicle price minus the trade-in value. For example, if you buy a $35,000 car and trade in a vehicle worth $8,000, you only pay sales tax on $27,000. This can save hundreds or even thousands of dollars. A few states (California, Hawaii, and others) tax the full purchase price regardless of trade-in.

How much should I put as a down payment on a car?

A common guideline is 20% of the vehicle price for new cars and 10% for used cars. A larger down payment reduces your loan amount, lowers monthly payments, and decreases total interest. It also helps you avoid being 'upside down' on the loan — owing more than the car is worth — which is especially important since cars depreciate quickly.

What is a good interest rate for a car loan?

As of 2026, good rates for new cars are typically 4.5-6.5% for borrowers with excellent credit (750+). Used car rates run 1-2% higher. Rates vary by credit score, loan term, and lender. Credit unions often offer the best rates. Always compare at least 3 lenders before accepting the dealer's financing — dealer markups on interest rates are common.

What is the total cost of owning a car beyond the loan?

The loan payment is just part of the picture. Total ownership costs include insurance ($1,500-$2,500/year), fuel, maintenance, registration, and depreciation. A useful rule: budget 1.5x your monthly payment for the true monthly cost. This calculator shows the total financing cost (price + tax + interest), which helps you compare deals before factoring in ongoing ownership costs.

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