Car Payment Calculator
Estimate your monthly car payment from the price, down payment, trade-in, sales tax, rate, and term. See the amount financed and total interest.
| Vehicle price | $35,000 |
| Sales tax (7% on price − trade-in) | +$2,450 |
| Down payment | −$5,000 |
| Trade-in | −$0 |
| Amount financed | $32,450 |
| Total of payments (loan + interest) | $39,014 |
Estimate only. Most states tax the price after trade-in; a few tax the full price. Excludes title, registration, and dealer fees.
How to use this calculator
Enter the vehicle price (the agreed purchase price before tax), your down payment, any trade-in value, your local sales tax rate, the interest rate (APR), and the loan term in months. The calculator shows:
- The amount financed (how much you actually borrow)
- Your fixed monthly payment
- Total interest paid over the loan
- A step-by-step breakdown of how the financed amount was built
If you already know the financed amount and just want the payment, use our auto loan calculator instead, which takes the financed amount as a direct input.
How car financing works
When you purchase a car with financing, the lender pays the dealer and you repay the lender over time in equal monthly installments. The amount you borrow — the amount financed — is determined by:
- Vehicle price (negotiated purchase price, not MSRP necessarily)
- Plus sales tax (typically on price minus trade-in in most states)
- Minus down payment (cash you pay at signing)
- Minus trade-in value (the credit you receive for your old vehicle)
That net figure is what is financed. Each monthly payment covers the current month's interest on the outstanding balance plus a portion of principal. Because the interest is charged on a declining balance, the principal share of each payment grows over time even though the payment itself stays the same — this is the amortization effect.
Your APR (Annual Percentage Rate) is driven by your credit score, the loan term, whether the car is new or used, and the lender's policies. Dealers may offer manufacturer-sponsored low rates on new vehicles, or they may mark up the rate above what you'd qualify for at a bank. It always pays to compare.
The car payment formula
M = P · [ r(1 + r)n ] / [ (1 + r)n − 1 ]
Where M = monthly payment, P = amount financed, r = monthly interest rate (APR ÷ 12), and n = number of monthly payments (term in months).
Worked example — step by step
You are buying a car for $35,000, putting $5,000 down, trading in a vehicle worth $3,000, with a state sales tax of 7%, an APR of 7.5%, and a 60-month term.
- Taxable base: $35,000 − $3,000 (trade-in) = $32,000
- Sales tax: $32,000 × 7% = $2,240
- Amount financed: $35,000 + $2,240 − $5,000 (down) − $3,000 (trade-in) = $29,240
- Monthly rate: 7.5% ÷ 12 = 0.625%
- Monthly payment: approximately $585
- Total paid: $585 × 60 = approximately $35,100
- Total interest: approximately $5,860
Now change the term to 48 months: the payment rises to approximately $710, but total interest drops to about $4,680 — saving roughly $1,180 and eliminating a full year of payments.
How to interpret your results
The amount financed is the most important number to confirm before signing. It should match what the dealer shows in the loan documentation. Verify each component: if the trade-in allowance, down payment, or tax calculation differs, the financed amount will differ and so will your payment.
The total interest figure converts the abstract APR into a concrete dollar cost. Comparing this number across different term or rate scenarios is the clearest way to understand the real cost of different financing options.
Common mistakes to avoid
- Negotiating only the monthly payment. Dealers often focus on the payment because a longer term can make an expensive vehicle seem affordable. Always negotiate the vehicle price and financing separately, and calculate total interest before agreeing.
- Not knowing your credit score before shopping. Your credit score directly affects your rate. Check it before visiting dealers so you know what rate range to expect and can identify if you're being offered a marked-up rate.
- Overlooking the trade-in's impact on tax. In most states, the trade-in credit reduces your taxable purchase price, which is a real financial benefit. Getting a higher trade-in offer can lower both your tax and your financed amount simultaneously.
- Forgetting title, registration, and doc fees. These costs — which vary widely by state and dealer — are not included here. They are typically hundreds of dollars and are often rolled into the financed amount, increasing your loan balance and interest charges.
- Accepting dealer financing without comparing alternatives. Get a pre-approval from your bank or credit union before going to the dealership. Dealer financing can be competitive (especially manufacturer promotions on new vehicles), but having a competing offer protects you and gives you leverage.
Estimates only, and not a loan offer. Your actual rate, tax, and fees depend on your credit, lender, state, and dealership. Tax treatment of trade-ins varies by state. This is not financial advice.
How we calculate this
The calculator builds the financed amount from vehicle price, sales tax (applied to price minus trade-in in most states), down payment, and trade-in value. The financed amount is then run through the standard fixed-rate amortization formula — M = P · [r(1 + r)^n] / [(1 + r)^n − 1] — where r is the monthly rate (APR ÷ 12) and n is the number of monthly payments. Total interest is the sum of all payments minus the financed amount.
Sources
Frequently asked questions
How is a car payment calculated?
Start with the vehicle price, add sales tax, then subtract your down payment and trade-in value to arrive at the amount financed. That financed amount is then run through the standard amortization formula with your interest rate and term to produce a fixed monthly payment that covers interest and principal in equal installments.
Does a trade-in reduce my sales tax?
In most US states, yes. Sales tax is applied to the vehicle price minus the trade-in allowance, so a higher trade-in lowers your tax bill. A small number of states tax the full purchase price regardless of trade-in. This calculator applies tax to the price-minus-trade-in amount, which is the more common treatment — verify your state's rules for precision.
What is a typical car loan term?
Common loan terms are 36, 48, 60, and 72 months. Shorter terms produce a higher monthly payment but significantly less total interest. Longer terms lower the payment but cost more overall and increase the time during which you may owe more than the car is worth. Choose the shortest term whose payment fits your budget comfortably.
Does this calculator include all taxes and fees?
It includes sales tax in the financed amount calculation, but not title, registration, documentation, or dealer fees, which vary by state and dealership. For a complete out-the-door cost, add those fees to the financed amount before entering it — or simply include them in the vehicle price field if your dealer rolls them into the deal.
What is the difference between APR and interest rate on a car loan?
For most auto loans, APR (Annual Percentage Rate) and the stated interest rate are the same because there are typically no financing fees added by the lender. If a lender charges origination or processing fees, the APR will be slightly higher than the nominal rate. Always compare APRs when shopping loans to make sure you're comparing the true cost.
How much should I put down on a car?
A down payment of at least 10–20% of the vehicle price is commonly suggested. A larger down payment reduces the financed amount, lowers your monthly payment and total interest, and reduces the period during which you owe more than the car is worth. If you are trading in a vehicle, the trade-in value effectively acts as a down payment.
What does it mean to be upside-down on a car loan?
Being upside-down (or underwater) means you owe more on the loan than the car is currently worth. Because cars depreciate quickly, this is common early in a long loan with a small down payment. If your car is totaled while you're upside-down, standard insurance may not cover the full balance — GAP insurance covers that shortfall.
Can I lower my car payment after purchase?
You may be able to refinance your auto loan if interest rates have dropped or your credit score has improved since you originally borrowed. Refinancing replaces your loan with a new one at a different rate or term. Be aware that extending the term to lower the payment can increase total interest, and there may be fees or restrictions on recently originated loans.