How this auto loan calculator works
Enter the vehicle price, your down payment, any trade-in value, your state's sales tax rate, fees you plan to roll into the loan, the APR, and the loan term in months. The calculator works out the amount financed, the monthly payment, the total of all payments, and the total interest. It also works for most simple-interest personal installment loans: set tax, fees and trade-in to zero and enter the loan amount as the price.
Sales tax and trade-ins
Most US states charge sales tax only on the difference between the new vehicle price and your trade-in value, which is why a trade-in can save more than its face value. This calculator uses that common method. A few states tax the full price regardless of trade-in, and some local jurisdictions add their own taxes, so check your state's rules. Title, registration, and dealer documentation fees vary widely; enter them in the fees field if you plan to finance them.
Loan term: the hidden cost of low payments
Dealers often focus on the monthly payment. Stretching a loan from 48 to 72 or 84 months lowers that payment, but you pay interest for longer, and lenders frequently charge a higher APR on longer terms. Long loans also raise the risk of being "upside down", owing more than the car is worth, because cars depreciate fastest in their first years. Try changing only the term in the calculator to see how total interest rises.
Getting a better APR
Your credit score is the largest driver of your rate. Getting pre-approved from a bank or credit union before visiting the dealer gives you a benchmark to compare against dealer financing. Manufacturer promotional rates can be very low on new cars, but they sometimes replace a cash rebate, so compare "low APR" against "rebate plus outside financing" using this calculator for both scenarios.
How much car can you afford?
A widely cited guideline is the 20/4/10 rule: put at least 20% down, finance for no more than four years, and keep total transportation costs (payment, insurance, fuel) under about 10% of gross income. It is a guideline rather than a law, but it keeps a car from crowding out savings goals. Remember to budget for insurance, which is often higher on financed and newer vehicles because lenders require full coverage.
Paying off early
Most auto loans use simple interest, so paying extra toward principal reduces the interest you owe. Confirm that your contract has no prepayment penalty and that extra payments are applied to principal rather than to future scheduled payments.
Limitations
This is an estimate. It assumes a fixed APR, equal monthly payments, and that the first payment occurs one month after signing. Your retail installment contract shows the exact amount financed, finance charge, and APR as required by the federal Truth in Lending Act.
Formula used
Sales tax = (price − trade-in) × tax rate. Amount financed = price + tax + fees − down payment − trade-in.
Payment = A × r / (1 − (1 + r)−n), where A is the amount financed, r is APR ÷ 12, and n is the term in months.
Frequently asked questions
Is sales tax calculated before or after the trade-in?
After, which is how most states do it. If your state taxes the full price, set the trade-in to zero and subtract it from the down payment instead.
What is a good auto loan term?
Shorter is cheaper. Many advisors suggest 48–60 months or less; longer terms increase total interest and depreciation risk.
Can I use this for a used car?
Yes. Used car APRs are often higher, so enter the rate you are actually quoted.
Does this include insurance?
No. Insurance is paid separately and should be part of your budget.
Keep planning
- Debt Snowball vs. Avalanche Calculator — plan payoff of all your debts.
- Take-Home Pay Calculator — check what payment fits your paycheck.
- Savings Goal Calculator — save for a bigger down payment.