Auto Loan Calculator

How to use this tool

Enter the price of the car, your down payment, the value of any trade in and what you still owe on it, then the APR and the loan term. Add your state sales tax and the title, registration and dealer fees, and choose whether they go on the loan or are paid up front. The monthly payment appears at the top with the amount financed, the total interest, a chart of the balance and a table comparing terms from 24 to 84 months.

The input people most often get wrong is the price. Use the out the door price you have negotiated, before rebates only if the rebate is paid to you separately, and do not enter the monthly figure a dealer quotes. A payment can be made to look affordable by stretching the term, so compare the amount financed and the total interest, not just the payment.

What the calculation is doing

An auto loan is an amortizing loan like a mortgage: every payment is the same, and each covers that month's interest first, with the rest reducing the balance. Before any of that, the calculator builds the amount financed. It starts from the price, adds sales tax and fees if they go on the loan, and takes off the down payment and the equity in your trade in, which is its value minus anything still owed on it.

Sales tax is worked out on the price after the trade in, which is how most states do it, or on the full price if you choose that. The payment then follows the standard formula, amount × r ÷ (1 − (1 + r) to the power −n), with r the monthly rate and n the number of months.

Long terms, depreciation and negative equity

Cars lose value fastest in their first years, while a loan is paid down slowest at the start, because the early payments are mostly interest. On a long loan with a small down payment the two lines can cross: for a year or more you owe more than the car would sell for. That matters if the car is written off, stolen or needs to be sold, because the insurance payout or sale price may not clear the loan.

Rolling negative equity into the next loan makes it worse. If you owe $14,000 on a car worth $10,000, the $4,000 gap is added to the new loan and you pay interest on it for years. The best defenses are a larger down payment, a shorter term, and keeping a car until the loan is paid off. Gap insurance covers the shortfall after a total loss, but it adds to the cost, so check whether your own insurer offers it more cheaply than the dealer.

The rate matters as much as the term. Each percentage point on a 60 month loan adds roughly $4.50 to $5 a month per $10,000 borrowed. Getting preapproved by a bank or credit union before visiting the dealer gives you an APR to beat, and lets you negotiate the price separately from the financing.

Monthly payment per $10,000 borrowed

Multiply by the amount financed in tens of thousands: a $30,000 loan at 7% for 60 months is 3 × $198.01 = $594.04.

A worked example you can check on paper

The calculator opens with a $35,000 car, $3,000 down, no trade in, 7% sales tax and $800 of fees, all financed at 7.5% for 60 months. Sales tax is 35,000 × 0.07 = $2,450, so the amount financed is 35,000 + 2,450 + 800 − 3,000 = $35,250.

The monthly rate is 0.075 ÷ 12 = 0.00625, and 1.00625 to the power −60 = 0.688092. The payment is 35,250 × 0.00625 ÷ (1 − 0.688092) = 220.3125 ÷ 0.311908 = $706.34. Sixty payments total $42,380.26, so the interest is $7,130.26, and the car costs $45,380.26 once tax, fees and interest are counted.

Now add a trade in worth $10,000 with $14,000 still owed, over 72 months. Tax falls to 7% of $25,000, $1,750, but the $4,000 of negative equity is added: 35,000 + 1,750 + 800 − 3,000 + 4,000 = $38,550 financed, and the payment is $666.53.

Mistakes that catch people out

Negotiating the monthly payment. A dealer can hit any payment by lengthening the term. Agree the price first, then the financing.

Forgetting tax and fees. They add several percent to the price and, if financed, you pay interest on them too.

Rolling in negative equity without noticing. Check that the amount owed on your old car is not quietly added to the new loan.

Financing add ons. Extended warranties, paint protection and similar products are often added to the amount financed. Ask for them to be listed and priced separately, and decline what you do not want.

Taking the first rate offered. Compare the dealer APR with a preapproved offer. Half a point on a large loan over five or six years adds up to hundreds of dollars.

Popular calculations

Each opens the calculator with those values filled in, and they can be changed once it is open. Unless shown otherwise they have no down payment, trade in, tax or fees.

Monthly payment by price, 7% for 60 months

Loan term

Interest rate

Down payment

With a trade in, tax and fees

How this was checked

The payment formula was checked against the standard case of $30,000 at 6% for 60 months, which gives $579.98, and every schedule was checked so that the principal repaid equals the amount financed and the balance reaches zero on the last payment. The amount financed was checked by hand for trade ins with positive and negative equity, with sales tax on the full price and on the price after trade in, and with tax and fees financed or paid up front.

Every address in the lists above was then opened and checked for a distinct title, the right monthly payment, a chart that renders, and clean CSV, image and print output containing only the values entered, at desktop, tablet and phone widths.

Common questions

How is a car loan payment calculated?

Work out the amount financed first: the price plus sales tax and fees, minus the down payment and any trade in equity. Then the payment is amount × r ÷ (1 − (1 + r) to the power −n), where r is the APR divided by 12 and n is the number of months. $30,000 at 7% for 60 months is $594.04 a month.

How much should I put down on a car?

A common rule of thumb is about 20% on a new car and 10% on a used one. A bigger down payment lowers the payment and the interest, and it reduces the chance of owing more than the car is worth in the first years, when it loses value fastest.

Is a 72 or 84 month car loan a bad idea?

It lowers the monthly payment but raises the total interest, and lenders often charge a higher APR on longer terms. On $30,000 at 7%, going from 60 to 84 months cuts the payment from $594.04 to $452.78 but adds $2,391 of interest, and you are more likely to owe more than the car is worth for longer.

What is negative equity on a trade in?

It is when you owe more on your current car than it is worth. If the old car is worth $10,000 and you owe $14,000, the $4,000 gap is usually added to the new loan, so you pay interest on a car you no longer own. The calculator shows it when the amount owed is more than the trade in value.

Does a trade in reduce sales tax?

In most states the trade in value is taken off the price before sales tax is worked out, which can save hundreds of dollars. A few states, including California, tax the full price regardless. Choose which applies in your state with the sales tax setting.

Should I take 0% financing or a cash rebate?

Compare the two totals. Take the rebate off the price, finance the rest at the rate your bank or credit union offers, and add up the payments. If that total is lower than the 0% deal without the rebate, the rebate is the better offer.

Related Calculators and Reference

• Loan Payment Calculator: the same amortization for a personal loan or any other fixed rate loan.
• Discount and Sales Tax Calculator: check the tax on the price, or take it back out.
• Gas Cost Calculator: the fuel bill that comes with the car each month.
• Depreciation Calculator: how a vehicle's book value falls year by year.
• Credit Card Payoff Calculator: clear higher rate debt before taking on a car payment.
• Car Lease Calculator: the same car leased instead of financed, with a lease against buy comparison.
• GST HST Calculator: the sales tax on a car purchase by province.
• Budget Calculator: see how much of take home pay a car payment can take.
• Consumer Financial Protection Bureau: How does a down payment affect my auto loan: down payments, trade ins and what you still owe.