How to use the car payment calculator
- Enter the vehicle price, your down payment and your trade-in value.
- Enter the interest rate (APR) and the loan term in months.
- Open More options to enter your sales tax rate and any fees. Choose whether the tax and fees are rolled into the loan or paid at signing.
- Read the monthly payment, amount financed, total interest and total cost. The CSV has the full payment schedule.
Formula
Sales tax = (price - trade-in) x tax rate, rounded to the cent (never below zero)
Amount financed = price - down payment - trade-in (+ tax + fees if rolled into the loan)
Payment = Financed x r / (1 - (1 + r)^-n), with r = APR / 12 and n = months
Total cost = price + tax + fees + total interest
Sales tax is applied to the price minus the trade-in value, using the rate you type in. This follows the rule in many states, but not all, so confirm with the dealer.
Worked example: a $32,000 car
The price is $32,000, the down payment is $4,000, the trade-in is $5,000, sales tax is 6%, fees are $500 and the loan is 6.9% for 60 months. Tax is 6% x ($32,000 - $5,000) = $1,620.00.
With tax and fees rolled into the loan, the amount financed is $32,000 - $4,000 - $5,000 + $1,620 + $500 = $25,120.00. The payment is $496.22 a month, total interest is $4,653.33 and the total cost is $32,000 + $1,620 + $500 + $4,653.33 = $38,773.33.
If you pay the tax and fees at signing instead, you finance $23,000.00. The payment is $454.34, interest falls to $4,260.59, and you need $6,120.00 in cash up front (the $4,000 down payment plus $2,120 of tax and fees).
Why the total cost matters more than the payment
A lower monthly payment is easy to get by stretching the term, but a longer loan usually means more interest, and the car may be worth less than you owe for longer. Compare the total cost line for several terms. Rolling taxes and fees into the loan raises the amount that earns interest, which is why the first example above costs more interest than the pay-up-front version.
How the trade-in is treated
The trade-in value reduces the amount you finance and, in this calculator, also reduces the taxable amount. If you still owe money on the trade-in, subtract that payoff from its value first and enter the net figure. A negative net amount rolled into a new loan raises the amount financed, so add it to the price or reduce the down payment to model it.
Other costs to ask about
Dealers may add documentation fees, extended warranties, GAP coverage and other products. Enter any of these you plan to buy under fees to see their effect, and use the sales tax calculator if you want to check a tax figure on its own. Insurance, fuel and maintenance are separate costs, and the fuel cost calculator can estimate the fuel part.
Assumptions and limits
- A fixed rate, equal monthly payments for the full term, interest charged monthly on the running balance.
- Sales tax is the rate you enter times the price minus the trade-in. Local rules vary and some places tax the full price. Rebates and manufacturer incentives are not modeled.
- Fees are entered by you, are not taxed here and are either financed or paid at signing, depending on your choice.
- The loan term can be 1 to 120 months. The final payment absorbs rounding.
- Registration, title, insurance, dealer add-ons and prepayment penalties are not modeled except through the fee amount you enter.
- This is an estimate for planning, not financial advice or an offer of credit.
Frequently asked questions
How is a car payment calculated?
The amount financed, the monthly rate (APR divided by 12) and the number of months go into the amortization formula. This calculator first subtracts your down payment and trade-in, and adds sales tax and fees if you roll them into the loan.
Is sales tax taken on the price or the price minus the trade-in?
This tool uses the price minus the trade-in, which many states do. Some states tax the full price. Check your state's rule or ask the dealer, and adjust the rate or fees to match.
Should I roll the tax and fees into the loan?
Rolling them in lowers the cash you need at signing but you pay interest on them. Switch the option off to see the difference in payment, total interest and cash due.
What is a good loan term for a car?
There is no single answer. Shorter terms cost less interest and build equity faster, while longer terms lower the payment. Try 36, 48, 60 and 72 months and compare the total interest and total cost.