Auto Loan Calculator
Estimate monthly car payments with taxes, trade-in, and fees.
Estimate your monthly car payment instantly. Account for Trade-in, Sales Tax, and Dealer Fees to see the true cost.
Car Details
Estimated Monthly Payment
For 60 months
Loan Details
What is Auto Loan Calculator?
Understanding the Auto Loan Calculator
Buying a car is often the second largest purchase in a person's life. This Auto Loan Calculator (or Car Payment Calculator) removes the guesswork from dealership negotiations. By factoring in sales tax, trade-ins, and down payments, it predicts your real-world monthly obligation, not just the "sticker price."
Who Should Use This?
- New Car Buyers: To compare manufacturer financing offers (e.g., 0% vs. Cash Back).
- Used Car Shoppers: To see what a $25,000 car actually costs monthly at 9% interest.
- Trade-In Upgraders: To calculate how positive (or negative) equity affects the next loan.
Why This Tool is Useful
Dealerships are experts at manipulating the "Four Square" worksheet to make a car look affordable by extending the loan term to 72 or 84 months. This calculator protects you by showing the Total Interest paid. It reveals when a "low monthly payment" actually costs you thousands more in the long run.
When to Use It
Use this tool before you step onto the lot. Knowing that a $35,000 truck equals a $600 payment puts you in control of the negotiation.
How to Use This Calculator
Follow these steps for a precise estimate:
- Enter Vehicle Price: The negotiated price of the car, not the MSRP.
- Add Down Payment: Cash you are putting upfront. More cash = lower payment + lower interest.
- Include Trade-In: The value dealer gives for your old car. Be sure to check this against KBB or NADA guides first.
- Set Sales Tax: Don't forget this! It defaults to 6% but varies by state (and sometimes city).
- Interest Rate & Term:
- New Cars: Typically 4% - 7%
- Used Cars: Typically 7% - 12%
- Term: 60 months (5 years) is standard. Avoid 72+ unless 0% interest.
The 20/4/10 Rule
Financial experts recommend this rule to stay safe:
- 20% Down: Covers initial depreciation gap.
- 4 Years: Max loan term of 48 months to build equity fast.
- 10% Income: Total car costs (loan + gas + insurance) shouldn't exceed 10% of gross income.
Formula & Calculation
Car loans are amortized, meaning you pay interest on the remaining balance. The math is identical to a mortgage.
Where:
- P (Principal): (Vehicle Price + Tax - TradeIn - DownPayment)
- i (Monthly Rate): Annual Interest Rate ÷ 12
- n (Months): Loan Term (e.g. 60)
Example Calculation
Example 1: The Sensible Sedan
Scenario: Buying a $25,000 Honda Civic. You trade in an old car for $5,000 and put $2,000 cash down. Tax is 6%.
Tax = 1,500 (25k * 0.06)
Principal = 25,000 + 1,500 - 5,000 - 2,000 = 19,500
Rate = 6% / 60 months
Result: Monthly payment is $377. Total interest paid is roughly $3,100.
Example 2: The "Underwater" Trap
Scenario: Same $25,000 car, but $0 down and no trade-in. You stretch the loan to 84 months (7 years) to lower payments.
Result: Payment drops to $380 (roughly same), BUT total interest jumps to $6,800. More dangerously, in Year 3, you still owe $18,000 but the car might only be worth $12,000.
Explanation of Results
- Total Cost of Car: This is the scariest number. It adds your down payment, trade-in, monthly payments, and interest. A $30k car often costs $40k in reality.
- Total Interest: Money paid to the bank for the privilege of driving the car now.
- Amortization: See how slowly the balance drops in the first year. This is why gap insurance is important.
Reference Tables
Term vs. Interest Cost ($30,000 Loan)
See how extending your loan term skyrockets the interest paid.
| Term | Interest Rate | Monthly Payment | Total Interest Cost |
|---|---|---|---|
| 36 Months | 5% | $899 | $2,360 |
| 48 Months | 5% | $690 | $3,160 |
| 60 Months | 6% | $580 | $4,799 |
| 72 Months | 7% | $511 | $6,820 |
| 84 Months | 8.5% | $470 | $9,890 |
Why use this calculator?
- Negotiation Power: Dealers make money on financing markups. Know the real numbers before you sit in "the box".
- Budget Protection: Use the "Total Cost" view to ensure you aren't buying too much car for your income.
- Scenario Testing: See how an extra $1,000 down payment affects your monthly bill instantly.
Frequently Asked Questions
Frequently Asked Questions
What is GAP Insurance and do I need it?
Guaranteed Asset Protection (GAP) covers the difference if your car is totaled and you owe more than it's worth. If you put less than 20% down, GAP is highly recommended because cars depreciate faster than you pay off the loan initially.
What is a "Balloon Payment"?
Some loans offer very low monthly payments in exchange for a massive lump sum (e.g., $5,000) due at the end. Avoid these for cars. If you can't pay the lump sum, you might lose the car despite years of payments.
Dealer Financing vs. Bank Loan?
Dealers often mark up interest rates. It is best to get "pre-approved" at your local bank or credit union first. Then, let the dealer try to beat that rate. If they can't, use your bank loan.
Does refinancing hurt my credit?
Refinancing triggers a hard inquiry, dropping your score by 5-10 points temporarily. However, if it saves you $50/month, it is usually worth it. Just don't extend the term back out to start over!
Key Terms & Definitions
Disclaimer: This calculator is for educational purposes only. Actual dealer fees, taxes, and rates may vary by location and creditworthiness. Always read your loan agreement carefully.
Last Updated: January 2026