Auto Loan Calculator

What this calculator does

This calculator estimates the monthly payment on a fixed-rate auto loan and the true cost of the vehicle. It accounts for your down payment, trade-in credit, sales tax, APR, and loan term in months.

How auto loan math works

The amortization math is identical to a fixed-rate mortgage. The bank charges interest each month on the remaining balance, and whatever is left of your payment after that interest goes toward the principal.

M = P × r(1 + r)^n / ((1 + r)^n − 1)

• P — loan amount (price − down payment − trade-in, plus tax if financed)
• r — monthly rate (APR ÷ 12)
• n — total number of monthly payments (term in months)

Sales tax conventions

This calculator computes sales tax on the price minus your trade-in value, which is the rule in most U.S. states. A few states (notably Florida) tax the full purchase price; in those states, set the trade-in to zero for the tax calculation. Your dealer's out-the-door price will reflect the local rule.

A worked example

On a $35,000 vehicle with $5,000 down, no trade-in, 7% sales tax rolled into the loan, a 7.5% APR, and a 60-month term, the loan amount is about $32,100. The monthly payment is roughly $643, and you'll pay approximately $6,500 in interest over the life of the loan — making the true cost of the vehicle about $41,500 plus the $5,000 down payment.

Tips and common mistakes

• Negotiate the price, not the monthly payment. Dealers often manipulate the term to hit a target monthly payment, which can hide thousands in extra interest.
• Get pre-approved. A rate from your bank or credit union gives you a benchmark and negotiating leverage at the dealer.
• Avoid 84-month loans. They keep you upside down on the loan (owing more than the car is worth) for years.
• Down payments matter. A 10–20% down payment on a new car helps you build equity and avoid being underwater.

Frequently asked questions

How is my monthly auto loan payment calculated?

Auto loans use the same fixed-rate amortization formula as a mortgage: M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. The result is your monthly principal-and-interest payment.

Should I take the manufacturer rebate or the 0% financing?

It depends on the rebate size, the rate on the alternative loan, and the loan term. A common rule of thumb: if the interest you'd pay on the standard rate over the loan exceeds the rebate, take the 0%. Otherwise take the cash and finance separately. Run both scenarios in the calculator to see the side-by-side difference.

How does the loan term affect total interest?

A longer term lowers the monthly payment but raises total interest because you pay interest for more months. On a $30,000 loan at 7.5%, going from 60 to 84 months drops the payment by ~$150/month but adds roughly $2,500 in interest. Most personal-finance experts recommend keeping auto loans to 60 months or less.

Is it cheaper to lease or buy?

Leasing typically has lower monthly payments but you don't own the car at the end. Buying has higher monthly payments but the car is yours, with resale value. If you keep cars 7+ years, buying is usually cheaper long term. If you want a new car every 3 years, leasing can pencil out.

What is a good APR on an auto loan?

Auto loan APRs vary with credit score, loan term, and the new-vs-used market. As of 2024–2026, prime borrowers typically see 5–8% on a new car and 6–10% on used. Always compare your dealer's offer to a pre-approved rate from a credit union or bank.

Should I roll sales tax into the loan?

Rolling sales tax into the loan keeps your up-front cost low but means you pay interest on the tax for the full loan term. If you can afford to pay the tax up-front, you'll save the interest cost. Many states require sales tax to be financed if you're not paying cash.