How is my monthly car payment calculated?

Your payment is the amount financed spread over the loan term using standard amortization. The amount financed is the vehicle price plus sales tax, minus your down payment and trade-in. The calculator applies your APR as a monthly rate to that balance to find a fixed monthly payment.

Does the calculator include sales tax?

Yes. You enter your local vehicle sales-tax rate and the calculator adds the tax to the price before financing. Many states tax only the price after the trade-in credit, so there is a toggle for that — turn it on if your state taxes price minus trade-in.

How does a trade-in lower my payment?

A trade-in works like extra cash down: its value is subtracted from the amount you finance, which lowers your loan balance and monthly payment. In many states it also reduces the taxable price, cutting your sales tax as well.

What loan term should I choose for a car?

Shorter terms like 36 or 48 months mean higher monthly payments but far less total interest, while 72 or 84 months lower the payment but cost much more over time and risk leaving you owing more than the car is worth. Pick the shortest term whose payment fits your budget.

What's the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal, while APR also folds in certain lender fees, giving a truer annual cost. For most auto loans the two are close. Use the APR your lender quotes for the most accurate payment estimate.

Should I put more money down on a car?

A larger down payment reduces the amount financed, lowers your monthly payment and total interest, and helps you avoid being "upside down" (owing more than the car's value). A common guideline is at least 20% down on a new car and 10% on a used one.

Are taxes and registration fees included?

The calculator includes sales tax but not title, registration, documentation, or dealer add-on fees, which vary widely by location and dealer. Ask for the full "out-the-door" price and add any such fees to the vehicle price field for a complete estimate.

Auto Loan Calculator

Our auto loan calculator shows your monthly car payment in seconds. Enter the vehicle price, down payment, trade-in value, sales tax, APR, and term to see exactly how much you'll owe each month and what the loan will cost in total.

Your vehicle & loan

Vehicle price

Down payment

Trade-in value

Sales tax rate (%)

Apply trade-in credit before tax?

Yes (most states) No

Interest rate / APR (%)

Loan term

How to use the auto loan calculator

Fill in the seven fields and hit Calculate. The vehicle price is the negotiated price before taxes and fees — not the sticker, but the number you agreed on with the dealer. The down payment is cash you'll hand over at signing. If you're trading in a vehicle, enter the dealer's trade-in offer; the calculator deducts it from the amount you need to borrow (and from the taxable price if your state allows the trade-in credit). Enter the APR your lender quotes, not the interest rate if the two differ. Choose the loan term in months and click Calculate to see your payment instantly.

How car payments are calculated

An auto loan is a standard amortizing installment loan: you borrow a fixed amount, agree to a fixed monthly payment, and every payment chips away at both the interest accrued that month and a portion of the principal. The payment is sized so the balance hits exactly zero on the last scheduled date. The formula that solves for this payment is the same present-value annuity math that underlies mortgages and personal loans.

Amount financed (price + tax − down − trade)

The starting balance of your loan is not simply the vehicle price. The calculator adds any applicable sales tax to the price first, then subtracts your down payment and trade-in value. The result — the amount financed — is what you actually borrow. A $35,000 car with 7% tax, $5,000 down, and no trade-in means you finance $35,000 × 1.07 − $5,000 = $32,450. That base determines every downstream number: monthly payment, total interest, and total cost.

Sales tax and the trade-in credit

In most U.S. states, the sales tax on a vehicle purchase is calculated on the price after the trade-in credit is subtracted — not on the full sticker price. If you trade in a car worth $8,000 toward a $35,000 vehicle in a state with that rule, you pay tax on only $27,000 instead of the full $35,000. The toggle in the calculator lets you match your state's policy. Turn it on (the default) if your state taxes price minus trade-in; turn it off if your state taxes the full purchase price regardless of trade-in.

Choosing a loan term (and the long-term trap)

The monthly payment drops as the term lengthens, which makes a 72- or 84-month loan feel affordable. But a longer term means more months of interest, and because new cars depreciate quickly in the first two years, a long loan can leave you "upside down" — owing more on the loan than the car is worth. If the car is totaled or you need to sell, you'd be responsible for the gap. As a rule of thumb, stick to 48 months or fewer for a used car and 60 months for a new one unless the interest rate is very low.

How to lower your car payment

There are four levers: increase the down payment (lowers the amount financed directly), increase the trade-in credit (same effect, plus possible tax savings), reduce the APR by shopping lenders or improving your credit score, or shorten the term (reduces total interest but raises the monthly payment). Comparing offers side-by-side — by changing just one input at a time — is the fastest way to find the best deal before you walk into a dealership.

Worked example

Suppose you're buying a car priced at $35,000, paying $5,000 down, trading in a vehicle worth $3,000 (state taxes on price minus trade-in), in a state with 7% sales tax, with an APR of 7.5% over 60 months.

Taxable base = $35,000 − $3,000 = $32,000
Sales tax = $32,000 × 7% = $2,240
Amount financed = $35,000 + $2,240 − $5,000 − $3,000 = $29,240
Monthly rate = 7.5% / 12 = 0.625%
Monthly payment ≈ $585.53
Total paid = $585.53 × 60 = $35,131.80
Total interest = $35,131.80 − $29,240 = $5,891.80
Total cost (price + tax + interest) = $35,000 + $2,240 + $5,891.80 = $43,131.80

Frequently asked questions

How is my monthly car payment calculated?: Your payment is the amount financed spread over the loan term using standard amortization. The amount financed is the vehicle price plus sales tax, minus your down payment and trade-in. The calculator applies your APR as a monthly rate to that balance to find a fixed monthly payment.
Does the calculator include sales tax?: Yes. You enter your local vehicle sales-tax rate and the calculator adds the tax to the price before financing. Many states tax only the price after the trade-in credit, so there is a toggle for that — turn it on if your state taxes price minus trade-in.
How does a trade-in lower my payment?: A trade-in works like extra cash down: its value is subtracted from the amount you finance, which lowers your loan balance and monthly payment. In many states it also reduces the taxable price, cutting your sales tax as well.
What loan term should I choose for a car?: Shorter terms like 36 or 48 months mean higher monthly payments but far less total interest, while 72 or 84 months lower the payment but cost much more over time and risk leaving you owing more than the car is worth. Pick the shortest term whose payment fits your budget.
What's the difference between APR and interest rate?: The interest rate is the cost of borrowing the principal, while APR also folds in certain lender fees, giving a truer annual cost. For most auto loans the two are close. Use the APR your lender quotes for the most accurate payment estimate.
Should I put more money down on a car?: A larger down payment reduces the amount financed, lowers your monthly payment and total interest, and helps you avoid being "upside down" (owing more than the car's value). A common guideline is at least 20% down on a new car and 10% on a used one.
Are taxes and registration fees included?: The calculator includes sales tax but not title, registration, documentation, or dealer add-on fees, which vary widely by location and dealer. Ask for the full "out-the-door" price and add any such fees to the vehicle price field for a complete estimate.