How to use this auto loan calculator
- Vehicle price — the price you negotiated, before tax, fees and trade-in.
- Down payment — cash you pay up front, including any rebate you apply to the price.
- Trade-in value — what the dealer pays for your current car, minus any loan you still owe on it. If you owe more than it is worth, enter 0 and add the shortfall to fees, because that negative equity gets rolled into the new loan.
- Sales tax and fees — your state and local tax rate, plus title, registration and documentation fees.
- Rate and term — the APR you are offered and the number of months.
How the amount financed is calculated
- Taxable amount = vehicle price − trade-in value
- Sales tax = taxable amount × tax rate
- Amount financed = price + sales tax + fees − down payment − trade-in
Most states give you this trade-in tax credit, which is one reason trading in at the dealer can beat selling privately. Some states, such as California, charge tax on the full price instead — tick the checkbox if that applies to you. The monthly payment then uses the standard amortization formula: M = A × r ÷ (1 − (1 + r)−n), where A is the amount financed, r is the APR ÷ 12 and n is the number of months.
Worked example
You negotiate a $35,000 price, put $5,000 down and trade in a car worth $3,000. Sales tax is 6%, fees are $800, and the credit union offers 7% for 60 months.
- Taxable amount: $35,000 − $3,000 = $32,000, so sales tax is $1,920.
- Amount financed: $35,000 + $1,920 + $800 − $5,000 − $3,000 = $29,720.
- Monthly payment: $588.49 for 60 months.
- Total interest: $5,589.50, for a total cost of $43,309.50 including tax and fees.
Loan term comparison
The same $29,720 at 7% over different terms:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $917.67 | $3,316 |
| 48 months | $711.68 | $4,441 |
| 60 months | $588.49 | $5,589 |
| 72 months | $506.70 | $6,762 |
| 84 months | $448.55 | $7,959 |
Stretching to 84 months lowers the payment by $139.94 compared with 60 months, but costs $2,369 more in interest — and lenders often charge a higher rate for the longest terms.
Tips for a better car loan
- Get preapproved first. A rate from your bank or credit union gives you a benchmark, so you can tell whether the dealer’s financing is a good offer.
- Negotiate the price, not the payment. A salesperson can hit any monthly number by stretching the term. Settle the price, then talk financing.
- Watch out for negative equity. Cars lose value fastest in the first years. With a small down payment and a long term, you can owe more than the car is worth, which hurts if it is totaled or you want to sell. GAP coverage pays that difference, but a bigger down payment avoids it.
- Price add-ons separately. Extended warranties and service plans rolled into the loan collect interest for the whole term.
- Compare 0% financing with a cash rebate. Run the numbers twice: at 0% with the full price, then at your bank’s rate with the rebate taken off the price. Pick the lower total cost.
Results are estimates. Tax rules, fees and rates vary by state and lender, so check the final buyer’s order and loan contract.
Frequently asked questions
Is sales tax charged on my trade-in?
In most states you pay tax only on the price minus the trade-in value. A few states, such as California, tax the full purchase price. Check your state’s motor vehicle or revenue department.
Should I roll taxes and fees into the loan?
It is common and keeps more cash in your pocket, but you pay interest on them for the whole term. Paying them up front lowers both the payment and total interest.
How much should I put down on a car?
A common rule of thumb is about 20% on a new car and 10% on a used one. That helps keep the loan below the car’s value as it depreciates.
Is a 72- or 84-month car loan a bad idea?
Not always, but it raises total interest and the risk of owing more than the car is worth. If the only way to afford a car is a very long term, a less expensive car may be the better choice.
Does the calculator include dealer rebates?
Enter a rebate as part of your down payment. In some states sales tax is charged on the price before the rebate, so your actual tax may be slightly higher.
Last updated: October 8, 2026