Auto Loan Calculator

Disclaimer: This calculator is provided for educational and estimation purposes only and does not constitute formal financial advice.

The payment question, with the dealership math included

A car loan is the same amortization math as a mortgage, but with two complications the mortgage tools do not have to think about. First, the term is quoted in months rather than decades — 36, 48, 60, 72, and 84 are the standard offerings — so small term changes move the payment more than people expect. Second, most US states charge sales tax on the purchase, and the tax gets financed along with the car, so the amount you borrow is rarely the sticker price.

The calculator above handles both. Enter the negotiated price, the cash down payment, any trade-in value, the APR you were actually quoted, the term in months, and your state’s sales tax rate, and it reports the fixed monthly payment, the interest you pay over the term, and the all-in cost of the car.

How the financed amount is built

Sales tax is charged on the purchase price minus the trade-in value in most states — the trade-in is treated as a partial payment, so you only pay tax on the part of the car you are actually buying:

The loan then covers the price plus that tax, less the down payment and the trade-in value:

On the default scenario that works out to a $35,000 price, $2,450 of sales tax at 7%, a $5,000 down payment, and no trade-in — so $32,450 is financed, not the $30,000 you might assume from the price and down payment alone. Anyone who quotes a payment from the sticker price minus the down payment is understating the loan by the tax.

The amortized payment

With a monthly rate i equal to the APR divided by twelve and n months of term, the payment PMT that retires the loan P exactly on schedule is the same formula the mortgage tools use:

The calculator then traces the balance month by month: each payment covers that month’s interest first, and whatever remains reduces principal. That is why the first payment on the default loan is mostly interest — $186.59 of the first $641.02 — while the final payment is almost entirely principal. The schedule table shows the balance falling month by month, and the chart draws the same curve.

What the term actually costs

The term is the biggest lever on a car loan, and it cuts both ways. Stretching the term lowers the payment, but every extra month extends the period over which interest accrues.

Moving from 48 to 72 months cuts the payment by $223.87 — nearly a quarter — but adds $2,495 of interest, so the same car costs $2,495 more. The trade is payment comfort today against total cost later, and it is a genuine trade: the 60-month payment is what most buyers can actually sustain.

There is a second, quieter cost to long terms that the numbers above only hint at. A car depreciates fastest in its first few years, and a 72-month loan pays down slower than most vehicles lose value, so the loan balance can exceed the car’s resale value for most of the term. That matters if the car is totaled (gap insurance covers the difference) or if you need to sell it while the loan is still large — the sale proceeds will not retire the loan. This is not a reason long terms are always wrong; it is the risk that makes the lower payment feel like a discount when it is partly deferred cost.

Down payments, trade-ins, and interest

A larger down payment does double duty. It shrinks the amount financed, and because interest accrues on the balance, every dollar of down payment saves interest over the whole term — not just the dollar itself. A trade-in works the same way on the loan side, and it has the extra benefit of shrinking the sales-tax base. If the down payment is the constraint, the house affordability calculator shows how that same trade-off plays out on a mortgage.

If the same budget is already servicing other balances, the debt consolidation calculator compares keeping them separate against rolling them into one loan at a single rate and fee.

A zero-rate promotional loan changes the picture completely. On the same $35,000 car with a $5,000 down payment, a 0% APR over 60 months produces a $540.83 payment and no interest at all, bringing the all-in cost to exactly $37,450 — the price plus tax. When a dealer offers 0% or a cash rebate, the two are alternatives, and the right choice depends on which produces the lower total cost for the term you want.

Keep the payment honest

The most common auto-loan mistake is picking a payment first and letting the term stretch to fit it. The schedule and the all-in cost exist to show what that stretching does: the car costs more, and the loan outlives the warranty. If the payment only works at 72 or 84 months, the honest question is whether the car itself is the problem — a cheaper vehicle at 60 months usually costs less in every way that matters.