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Auto Loan Calculator: Monthly Car Payment and Total Cost
Work out the monthly payment for a car loan after your down payment and trade-in, with optional sales tax and fees, and see how much the financing adds to the price of the car.
How the car payment is worked out
First the amount financed is found: vehicle price, plus sales tax and fees, minus your cash down payment and trade-in value, plus any balance still owed on the trade-in. That amount is repaid with equal monthly payments using the standard formula Payment = L × r ÷ (1 − (1 + r)−n), where L is the amount financed, r is the annual rate divided by 12 and n is the number of months.
Total interest is the payments added together minus the amount financed. Interest is charged monthly on the remaining balance, so a larger down payment helps twice: it lowers the loan and the interest on it.
Sales tax and trade-ins
Rules differ by place. In some jurisdictions tax is charged only on the difference between the new price and your trade-in; in others it applies to the full price. The selector lets you model either, and you enter the rate yourself because rates change. Always confirm the method with the dealer or local tax authority.
If you still owe money on the car you trade in and it is worth less than that debt, the shortfall is called negative equity. Rolling it into the new loan raises the amount financed, so you pay interest on yesterday's car as well as today's.
Choosing the term
A longer term lowers the monthly payment and raises total interest. Cars lose value while you are repaying, so a long loan with a small down payment can leave you owing more than the car is worth. A common cautious approach is to pick the shortest term whose payment fits the budget comfortably after insurance, fuel and maintenance.
Compare lenders on the annual percentage rate and fees, not only the headline rate. The APR calculator shows how upfront charges raise the true cost, and the lease calculator covers the leasing alternative.
What is not included
Insurance, fuel, servicing, parking and depreciation are not part of the loan payment, yet they are a large share of ownership cost. Add-ons such as extended warranties can be financed but increase interest. Promotional rates may apply only to certain terms or credit profiles. Use the result to compare offers and set a budget, then check the final contract figures.
Worked example
A 32,000 car with 4,000 down, a 6,000 trade-in, 7% sales tax on the price after the trade-in, 500 in fees and a 6.9% loan over 60 months.
Inputs
| Vehicle price | 32000 |
|---|---|
| Cash down payment | 4000 |
| Trade-in value | 6000 |
| Loan still owed on the trade-in | 0 |
| Sales tax rate | 7 % |
| Sales tax is charged on | Price minus trade-in |
| Fees added to the loan | 500 |
| Annual interest rate | 6.9 % |
| Loan term | 60 months |
Result
For 60 months on a loan of 24,320.00.
| Sales tax | 1,820.00 |
|---|---|
| Amount financed | 24,320.00 |
| Total of loan payments | 28,825.11 |
| Total interest | 4,505.11 |
| Price, tax and fees plus interest | 38,825.11 |
- The last row is what the car costs including tax, fees and interest, before insurance, fuel and upkeep.
Financial disclaimer: Results are estimates for planning and education. They are not financial, tax or legal advice. Fees, taxes, rates and rules vary by lender, product and country, so confirm figures with your provider or a qualified adviser before making decisions.
Frequently asked questions
How is a car loan payment calculated?
Subtract your down payment and trade-in from the price, add tax and fees, then spread that amount over the term using the standard amortization formula at the monthly interest rate.
Is sales tax charged on the price or the price after trade-in?
It depends on where you live. Some places tax only the difference after the trade-in and others tax the full price. This calculator offers both so you can match your local rule.
What is negative equity on a trade-in?
It is when you owe more on your old car than it is worth. The shortfall is usually added to the new loan, which raises the payment and the interest you pay.
How much down payment should I make on a car?
There is no single correct amount. A larger down payment lowers the loan and interest and reduces the risk of owing more than the car is worth, but you should keep an emergency reserve.
Does this include insurance and fuel?
No. It covers only the loan. Insurance, fuel, maintenance and registration are separate costs that you should add to your budget.
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References and sources
- Consumer Financial Protection Bureau: guidance on auto loans and comparing financing offers. Link
- Standard amortization formula from introductory finance textbooks.