How this works
Auto loans look like normal loans on the surface, but the financed amount is a moving target. Sales tax adds to the price (in most US states it applies to price minus trade-in), while a down payment and trade-in both subtract. Once you know what you're actually borrowing, the monthly payment is just standard amortization. Enter the sticker price, your trade-in and down-payment cash, the local sales-tax rate, and the loan terms — the calculator gives you the monthly payment, total interest, and the amount actually being financed.
The formula
M = monthly payment. r = monthly rate (annual ÷ 12, decimal). n = total months (years × 12). Tax rate is decimal (7% → 0.07). Many states tax only the post-trade-in amount; some tax the full sticker price. Adjust the tax field to match your state.
Example calculation
- Vehicle price $32,000, trade-in $5,000, down payment $4,000, sales tax 7%, 7.5% APR over 5 years.
- Tax = (32,000 − 5,000) × 7% = $1,890. Amount financed = 32,000 + 1,890 − 5,000 − 4,000 = $24,890.
- Monthly payment ≈ $499. Total paid ≈ $29,940. Total interest ≈ $5,050.
Frequently asked questions
Should I take the dealer's 0% offer or the manufacturer rebate?
Run both through the calculator. Take the rebate if you can finance the (lower) price elsewhere at a competitive rate; take the 0% if your alternative rate is high enough that the interest savings beat the rebate. On a $30k car, a $2,000 rebate vs. 0% APR over 5 years usually breaks even around 4–5% market interest.
Why is "amount financed" sometimes higher than the car price?
Sales tax. If your trade-in is small or zero, the tax adds 6–10% on top of the sticker price, before you subtract the down payment. With a 0 trade-in, $32,000 + 7% tax = $34,240. Subtract a $4,000 down payment and you're still financing $30,240 — slightly less than the price, in this case, but the gap closes fast as down payment shrinks.
How long should I take the loan for?
Industry standard is 5–7 years for new and 4–6 for used. Going beyond 6 years pushes monthly payments down but a typical car depreciates faster than the loan amortizes — meaning you owe more than the car is worth (negative equity) for most of the term. Stick to a term where the car is paid off well before you'd normally replace it.
Does this calculator handle leases?
No — leases use a different math (capitalized cost, residual value, money factor). This calculator is purely for purchase loans. We may add a lease calculator later; for now use a dealer-provided lease quote and verify the numbers separately.