Auto Loan Calculator
Estimate your monthly car payment including down payment, trade-in value, and sales tax.
By Evan Carter · Updated August 15, 2026
Monthly Payment
$655
Estimated monthly car payment
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $655 | $498 | $157 | $33,802 |
| 2 | $655 | $500 | $155 | $33,302 |
| 3 | $655 | $503 | $153 | $32,799 |
| 4 | $655 | $505 | $150 | $32,294 |
| 5 | $655 | $507 | $148 | $31,787 |
What Your Car Payment Is Made Of
An auto loan is a secured loan used to purchase a vehicle. The car itself serves as collateral, which means the lender can repossess it if you stop paying. Because that lowers the lender's risk, auto loans usually carry lower interest rates than unsecured personal loans. This calculator estimates your monthly payment and total cost from the amount financed, the interest rate, and the loan term, and it accounts for your down payment, trade-in, and sales tax.
How the Amount Financed Is Calculated
The amount financed is the figure the amortization formula is actually applied to. It equals the vehicle price plus applicable sales tax, minus your down payment and any trade-in value. Once that number is set, the monthly payment is found with the standard formula M = P[r(1+r)^n] / [(1+r)^n − 1], where P is the amount financed, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments (the term in months). Reducing the amount financed through a larger down payment or trade-in is one of the most effective ways to lower both your monthly payment and your total interest cost.
Example: A $30,000 Car with $3,000 Down
Suppose you buy a vehicle priced at $30,000 in a state with a hypothetical 6% sales tax, put $3,000 down, and have no trade-in. Sales tax adds $1,800, so the amount financed is $28,800. At a hypothetical 5.5% annual rate over 60 months, the monthly payment works out to roughly $550, and you would pay about $4,200 in interest over the life of the loan. Increasing the down payment or shortening the term would lower both of those figures. Adjust the inputs above to model your own scenario.
The Term Length Trade-Off
Stretching a car loan to a longer term is tempting because it shrinks the monthly payment, but it has two downsides. First, you pay considerably more total interest. Second, because vehicles depreciate quickly, a long term keeps you upside down (owing more than the car is worth) for a longer stretch, which is risky if the car is totaled or you need to sell. A shorter term costs more each month but builds equity faster and reduces total interest.
New vs. Used Car Loans
New car loans typically offer lower interest rates and longer available terms, and manufacturers sometimes provide promotional financing. Used car loans may carry slightly higher rates, but the lower purchase price often results in a smaller loan and lower overall cost. When deciding, look beyond the payment to the total cost of ownership, including depreciation, insurance, fuel, and maintenance.
Which Levers Move the Payment Most
Every field in this calculator pushes your payment in a predictable direction, so it helps to understand the levers before you negotiate:
- Vehicle price: The starting point for everything. A lower negotiated price reduces both the loan and the sales tax charged on it.
- Down payment: Cash paid upfront that directly lowers the amount financed, your payment, and total interest.
- Trade-in value: Works like additional down payment by reducing the financed balance. In some states it also lowers the taxable amount.
- Interest rate: The price of borrowing. Improving your credit or comparing lenders can move this more than you might expect.
- Loan term: A longer term lowers the monthly payment but raises total interest and extends the period of negative equity.
- Sales tax: Added to the financed amount in most states, so a higher tax rate quietly increases your payment.
Avoiding Common Pitfalls
The most common mistake at a dealership is negotiating around the monthly payment instead of the total price. A salesperson can hit almost any target payment by extending the term, which can leave you paying far more overall. Focus on the out-the-door price, the interest rate, and the total interest figure shown above. Be cautious about rolling negative equity from an old loan into a new one, and treat optional add-ons such as extended warranties as separate decisions rather than small line items buried in the payment.
If Your Situation Is Not a Car Loan
This calculator is purpose-built for vehicle purchases because it handles trade-ins and sales tax. For a general fixed-rate loan without those extras, use the loan calculator. To study how additional principal payments could shorten the loan, the amortization calculator lets you add an extra monthly payment.
Frequently Asked Questions
How is my monthly car payment calculated?
Your monthly car payment is calculated based on the amount financed (vehicle price plus sales tax, minus your down payment and trade-in value), the interest rate, and the loan term. The standard loan amortization formula is used to determine a fixed monthly payment.
Should I choose a longer or shorter auto loan term?
A shorter loan term means higher monthly payments but significantly less total interest. Longer terms lower your monthly payment but increase total cost and raise the risk of being "upside down" (owing more than the car is worth). As a general rule, keeping an auto loan to a shorter term reduces both the interest you pay and the time you spend with negative equity.
How does a trade-in affect my auto loan?
Your trade-in value is subtracted from the amount you need to finance. A higher trade-in value means a smaller loan amount, lower monthly payments, and less total interest paid. Get quotes from multiple dealers and online valuation services to maximize your trade-in value, and watch out for any negative equity from a loan still owed on the car you are trading in.
Is sales tax included in my auto loan?
In most states, sales tax is calculated on the vehicle purchase price and can be included in your financing. This calculator adds the sales tax to the amount financed. Some states allow you to deduct the trade-in value before calculating tax, which lowers the taxable amount. Rules vary widely, so confirm how your state treats sales tax and trade-ins before finalizing the numbers.
What is a good interest rate for a car loan?
Auto loan rates depend heavily on your credit score, the loan term, and whether the car is new or used. Borrowers with stronger credit generally qualify for lower rates, and used cars typically carry somewhat higher rates than new ones. Always gather several quotes and compare credit union, bank, and dealer financing, since rates for the same buyer can differ noticeably between lenders.
What does it mean to be upside down on a car loan?
Being upside down, or having negative equity, means you owe more on the loan than the car is currently worth. It commonly happens with small down payments and long terms because cars depreciate faster than the balance falls early on. If you sell or total the vehicle while upside down, you must cover the gap out of pocket, which is why a larger down payment and shorter term help.
Should I take dealer financing or get a pre-approval?
Getting pre-approved by a bank or credit union before you shop gives you a benchmark rate and strengthens your negotiating position. Dealers can sometimes beat that rate through manufacturer financing, so it is worth comparing both. Bring your pre-approval to the dealership and let the financing compete; just make sure you are comparing the same loan amount and term.
Does a bigger down payment really help?
Yes. A larger down payment reduces the amount financed, which lowers your monthly payment, cuts the total interest you pay, and shrinks the period when you might be upside down. It can also improve your approval odds and the rate you are offered. Use the down payment slider above to see how different amounts change your monthly payment and total cost.
Sources
This calculator provides estimates for informational purposes only. Results should not be considered as financial advice. Actual amounts may vary based on additional factors not included in this calculator. Consult a qualified financial advisor for personalized advice.
Tax data is based on 2026 federal and state rates (IRS Rev. Proc. 2025-32, Tax Foundation). State bracket thresholds may differ slightly from official figures due to rounding and inflation adjustments. Data is updated annually and may not reflect mid-year legislative changes.
See how we calculate and our editorial policy for the formulas, sources, and review process behind this tool.