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Formula
P = Price + Tax − Down payment − Trade-in; M = P × r(1 + r)^n ÷ ((1 + r)^n − 1); if r = 0, M = P ÷ n
- Tax
- the sales tax, your rate × (price − trade-in), or × the full price if your state taxes the full price
- P
- the amount financed (tax is rolled into the loan)
- M
- the fixed monthly payment
- r
- the monthly rate, the APR ÷ 12 as a decimal (6% → 0.005)
- n
- the loan term in months
What this auto loan calculator works out
A car loan rarely starts from a round number. The sticker price goes up by sales tax and down by whatever you put toward it in cash or with your current car. This auto loan calculator follows that order:
- Sales tax at the rate you enter, charged either on the price minus your trade-in or on the full price.
- Amount financed: price plus tax, minus the down payment and trade-in.
- Monthly payment for that amount at your APR and term.
- Total interest, the total of all payments, and the total cost including the money you put down.
- A yearly amortization schedule showing principal paid, interest paid and the balance left at the end of each year.
If you already know the exact amount you are borrowing, the general loan calculator skips the tax and trade-in steps. For a month-by-month table, or to see what extra payments save, use the amortization calculator.
How to calculate auto loan payments by hand
Say you are buying a $30,000 car with a $6,000 trade-in and $3,000 down, in a place with a 7% sales tax applied after the trade-in, at 7.5% APR for 60 months.
- Taxable amount: $30,000 − $6,000 = $24,000. Sales tax: $24,000 × 0.07 = $1,680.
- Amount financed: $30,000 + $1,680 − $3,000 − $6,000 = $22,680.
- Monthly rate: r = 0.075 ÷ 12 = 0.00625.
- Growth factor: (1 + r)^60 = 1.00625^60 ≈ 1.4533.
- Payment: $22,680 × 0.00625 × 1.4533 ÷ 0.4533 ≈ $454.46.
- Interest: $454.46 × 60 − $22,680 ≈ $4,587.64 over the life of the loan.
The first payment includes $141.75 of interest ($22,680 × 0.00625), so only about $313 of it reduces the balance. Each month the balance is a little lower, the interest share shrinks and more of the same payment goes to principal.
Auto loan calculator with trade-in and taxes
Where the tax is charged makes a visible difference. Take a $35,000 car, a $10,000 trade-in, no cash down, a 6% tax rate and a 7% APR over 60 months:
| Tax charged on | Sales tax | Amount financed | Monthly payment | Total interest |
|---|---|---|---|---|
| Price minus trade-in ($25,000) | $1,500.00 | $26,500.00 | $524.73 | $4,983.91 |
| Full price ($35,000) | $2,100.00 | $27,100.00 | $536.61 | $5,096.75 |
The trade-in tax credit saves $600 of tax and about $113 of interest. States set their own rules, and some cap or exclude the credit, so confirm yours before relying on it. The FTC suggests getting the “out-the-door” price in writing, which includes taxes and fees, before you discuss financing.
Payments by term, including 84 months
Monthly payment and total interest on $25,000 financed, calculated with the same formula and rounded to the cent:
| Term | Payment at 6% | Interest at 6% | Payment at 9% | Interest at 9% |
|---|---|---|---|---|
| 36 months | $760.55 | $2,379.74 | $794.99 | $3,619.76 |
| 48 months | $587.13 | $3,182.03 | $622.13 | $4,862.05 |
| 60 months | $483.32 | $3,999.20 | $518.96 | $6,137.53 |
| 72 months | $414.32 | $4,831.20 | $450.64 | $7,445.97 |
| 84 months | $365.21 | $5,677.96 | $402.23 | $8,787.06 |
Stretching from 60 to 84 months cuts the payment by about $118 at 6%, but adds almost $1,700 of interest. At 9% the extra interest is more than $2,600. Long terms also mean the balance falls slowly while the car loses value quickly, which raises the chance of owing more than the car is worth if you need to sell or trade it early. Used-car loans often carry higher APRs than new-car loans, so run the calculator at the rate you have actually been offered.
How to calculate auto loan interest
Most auto loans charge simple interest on the outstanding balance. Each month’s interest is the balance times the APR ÷ 12, and the rest of your payment reduces the principal. That is why the yearly schedule shows interest falling every year even though the payment stays the same. The CFPB explains that more of each early payment goes to interest and that a longer term means paying more interest overall.
Paying extra toward principal shortens the loan and cuts interest on a simple-interest loan, but check your contract first: whether you can prepay without a penalty depends on the contract and state law.
Common mistakes
- Comparing monthly payments only. A lower payment often comes from a longer term. Compare total interest and total cost too.
- Forgetting the tax. Leaving the tax rate at zero can understate the loan by well over a thousand dollars on a typical new car.
- Entering the full trade-in value when you still owe on it. Enter your equity. Negative equity rolled into the new loan increases what you borrow.
- Ignoring fees and add-ons. Documentation fees, service contracts and GAP coverage financed with the car raise the payment. Add them to the price to include them.
- Using a teaser rate you have not been approved for. Advertised APRs often need excellent credit. Use your pre-approved rate.
Glossary
- APR. The yearly cost of credit, including the interest rate and certain finance charges.
- Amount financed. The amount you borrow after taxes, down payment and trade-in.
- Trade-in equity. What the dealer pays for your old car minus any loan balance still owed on it.
- Negative equity. Owing more on a car than it is worth.
- Term. The number of monthly payments.
Worked examples
A new car with a trade-in
A $38,500 car, $4,000 down, a $9,000 trade-in, 6.5% sales tax on the price minus the trade-in, 6.9% APR for 60 months.
Inputs: Vehicle price = $38500; Down payment = $4000; Trade-in value = $9000; Sales tax rate = 6.5 %; Sales tax is charged on = Price minus trade-in; Interest rate (APR) = 6.9 %; Loan term = 60 months
Sales tax = $29,500.00 × 6.5% = $1,917.50 Amount financed = $38,500.00 + $1,917.50 − $4,000.00 − $9,000.00 = $27,417.50 Monthly payment over 60 months at 6.9% APR = $541.61
Answer: Financing $27,417.50 for a $38,500.00 vehicle at 6.9% APR over 60 months: $541.61 a month and $5,078.90 in interest.
A used car with tax on the full price
A $21,900 used car in a state that taxes the full price at 7.25%, with $2,500 down, a $3,000 trade-in, 9.4% APR over 48 months.
Inputs: Vehicle price = $21900; Down payment = $2500; Trade-in value = $3000; Sales tax rate = 7.25 %; Sales tax is charged on = Full vehicle price; Interest rate (APR) = 9.4 %; Loan term = 48 months
Sales tax = $21,900.00 × 7.25% = $1,587.75 Amount financed = $21,900.00 + $1,587.75 − $2,500.00 − $3,000.00 = $17,987.75 Monthly payment over 48 months at 9.4% APR = $451.05
Answer: Financing $17,987.75 for a $21,900.00 vehicle at 9.4% APR over 48 months: $451.05 a month and $3,662.66 in interest.
A 0% promotional loan, no sales tax
A $27,600 car with $3,600 down at a 0% APR dealer offer over 72 months, in a state with no sales tax.
Inputs: Vehicle price = $27600; Down payment = $3600; Trade-in value = $0; Sales tax rate = 0 %; Sales tax is charged on = Price minus trade-in; Interest rate (APR) = 0 %; Loan term = 72 months
Sales tax = $27,600.00 × 0% = $0.00 Amount financed = $27,600.00 + $0.00 − $3,600.00 − $0.00 = $24,000.00 Monthly payment over 72 months at 0% APR = $333.33
Answer: Financing $24,000.00 for a $27,600.00 vehicle at 0% APR over 72 months: $333.33 a month and $0.00 in interest.
Assumptions and limitations
- Sales tax is added to the price and financed with the loan. The down payment and trade-in value reduce the amount financed.
- You choose whether tax applies to the price minus the trade-in or to the full price. The calculator does not look up state or local rates or rules; enter your own combined rate.
- The trade-in value should be your equity in the car, meaning what the dealer pays for it minus any loan balance you still owe on it.
- Title, registration, documentation and dealer fees, rebates, service contracts and insurance are not included unless you add them to the price yourself.
- The APR is treated as a fixed annual rate divided by 12, with equal monthly payments starting one month after purchase. Payments are not rounded to the cent; the last one clears the remaining balance.
- The term is a whole number of months from 1 to 120.
Frequently asked questions
How do you calculate an auto loan payment?
Work out the amount financed (price plus sales tax, minus down payment and trade-in), divide the APR by 12 to get the monthly rate r, then use M = P × r(1 + r)^n ÷ ((1 + r)^n − 1), where n is the number of months. A $22,680 loan at 7.5% over 60 months comes to $454.46 a month.
How do I calculate auto loan interest?
The first month's interest is the amount financed times the APR divided by 12, so $22,680 at 7.5% is charged $141.75 in month one. Total interest over the loan is all of your payments minus the amount financed. The calculator adds this up for you and shows it year by year in the schedule.
Does a trade-in lower the sales tax?
In many states, yes. Sales tax is charged on the price minus the trade-in allowance, so a $10,000 trade-in at a 6% rate saves $600 of tax. Some states tax the full price regardless. Choose the matching option in the calculator and check your state's rule with the dealer or your state revenue department.
What if I still owe money on my trade-in?
Enter the trade-in value minus what you owe. If you owe more than the car is worth, that negative equity is often added to the new loan, which the CFPB notes makes the new loan more expensive. You can model it by adding the shortfall to the vehicle price.
Is an 84-month car loan a good idea?
It lowers the payment but raises the total interest. On $25,000 at 6%, an 84-month term costs $365.21 a month and $5,677.96 in interest, against $483.32 and $3,999.20 over 60 months. Longer terms also keep you owing more than the car is worth for longer.
Should I enter the APR or the interest rate?
Enter the APR shown on your offer or Truth in Lending disclosure. On most simple-interest auto loans with no separate finance charges the two are the same. If the APR includes fees that are not part of the amount financed, the payment shown will be slightly higher than the lender's.
Why is my dealer's payment different from the calculator?
The dealer's figure usually includes items this calculator leaves out, such as documentation, title and registration fees, add-ons like service contracts or GAP coverage, or a different first-payment date. Ask for the out-the-door price in writing and enter it as the vehicle price to compare like with like.
Sources
- Financing or Leasing a Car — Federal Trade Commission. Checked October 10, 2026.
- What is amortization and how could it affect my auto loan? — Consumer Financial Protection Bureau. Checked October 10, 2026.
- Should I trade in my car if it's not paid off? — Consumer Financial Protection Bureau. Checked October 10, 2026.
- What is the difference between a loan interest rate and the APR? — Consumer Financial Protection Bureau. Checked October 10, 2026.
- Can I prepay my loan at any time without penalty? — Consumer Financial Protection Bureau. Checked October 10, 2026.