How the auto loan calculator works
The amount you finance is the vehicle price plus sales tax and fees, minus your down payment and trade-in. In most states sales tax is charged on the price after the trade-in credit, so trading in a car saves you tax as well; this calculator applies that rule. The monthly payment is then found with the same amortization formula banks use for any installment loan.
The formula
Amount financed = price + tax + fees − down payment − trade-in, where tax = (price − trade-in) × tax rate. Payment M = P × r / (1 − (1 + r)−n) with r = APR ÷ 12 and n = term in months.
Example
Borrowing $25,000 at 5% APR for 60 months costs about $471.78 a month and roughly $3,300 in total interest. Stretch the same loan to 84 months and the payment falls, but you pay noticeably more interest and are more likely to owe more than the car is worth for the first few years.
Ways to lower your payment
Get pre-approved by a bank or credit union before visiting the dealer so you have a rate to compare. Negotiate the vehicle price separately from financing and the trade-in. A larger down payment reduces both the payment and the risk of being "upside down" on the loan.
Frequently asked questions
Is sales tax charged on the price after trade-in?
In most states, yes — you pay tax only on the difference. A handful of states tax the full price. To model that, set the trade-in to $0 and add its value to the down payment instead.
What is a good auto loan term?
Shorter is cheaper. Many financial planners suggest 60 months or less for a new car and 48 months or less for a used one.
Should I roll fees into the loan?
Rolling them in is convenient but means paying interest on them. Paying fees in cash keeps the loan smaller.
What APR should I enter?
Use your pre-approval rate if you have one. Rates depend heavily on credit score, loan term and whether the car is new or used.
Results are estimates for educational purposes only and are not financial, tax, legal or medical advice. See our disclaimer. Last reviewed 2026-10-22.