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How to use the Auto Loan Calculator
- 1Enter the vehicle price and the interest rate (APR) you were offered.
- 2Choose the loan term; 60 and 72 months are the most common.
- 3Add your down payment, trade-in value, sales tax rate and fees.
- 4Review the monthly payment, total interest and total cost.
How the car payment is calculated
The amount financed is the vehicle price plus sales tax and fees, minus your down payment and trade-in value (in most US states sales tax is charged on the price after the trade-in credit). The monthly payment then uses the standard amortization formula, the same one lenders use.
Tips for a cheaper car loan
Get pre-approved by a bank or credit union before visiting the dealer so you can compare rates. Keep the term as short as you can afford: a 72- or 84-month loan lowers the payment but costs much more interest, and you can owe more than the car is worth for years. Putting 10–20% down also helps avoid being upside down on the loan.
Example: 36 vs 84 months on a $35,000 car
With $5,000 down, 7% sales tax and $800 in fees, you finance $33,250 at 7% APR. Look at how much the term changes the total interest:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $1,026.66 | $3,710 |
| 48 months | $796.21 | $4,968 |
| 60 months | $658.39 | $6,253 |
| 72 months | $566.88 | $7,565 |
| 84 months | $501.83 | $8,904 |
Watch out for negative equity
Cars lose value fastest in the first years. With long loans and small down payments you can owe more than the car is worth. If you then sell or trade it in, the shortfall is often rolled into your next loan. A larger down payment and a term of 60 months or less helps avoid this.
Frequently asked questions
What is a good interest rate for a car loan?
Rates depend mainly on your credit score, the loan term and whether the car is new or used. Borrowers with excellent credit get the lowest rates; used-car loans usually cost a few points more. Compare offers from at least three lenders.
Is sales tax included in the car loan?
Usually yes: most buyers roll sales tax and fees into the loan. This calculator lets you include them so the payment matches what the dealer will quote.
How much car can I afford?
A popular guideline is the 20/4/10 rule: put 20% down, finance for no more than 4 years, and keep total car costs (payment, insurance, fuel) under 10% of your gross income.