Auto Loan Calculator converts vehicle price, down payment, trade-in value, sales tax, and interest rate into a monthly payment, total interest, and total cost across the loan.
Calculate Your Monthly Payment on a New or Used Auto Loan
This calculator turns a vehicle’s price, down payment, trade-in value, sales tax rate, interest rate, and loan term into an estimated monthly payment, total interest paid, and total cost of ownership. Car buyers and shoppers comparing dealer financing against a bank or credit union loan use it to see how a specific price, rate, and term will play out before signing a contract.
Enter Vehicle Price, Payment Details, and Loan Term
Enter the auto price, down payment, trade-in value, and state sales tax rate in your selected currency, plus the interest rate as an annual percentage and the loan term in months. The calculator assumes a nominal annual percentage rate (APR) compounded monthly, not an annual percentage yield, and returns your monthly payment, total interest, and total cost.
How the Auto Loan Calculator Computes Your Monthly Payment
The calculator first finds the taxable amount by subtracting your trade-in value from the auto price, then multiplies that figure by your sales tax rate. This reflects the trade-in tax credit that most U.S. states apply, but it isn’t universal: California, Virginia, Hawaii, and Washington, D.C. tax the full purchase price regardless of a trade-in, so confirm your own state’s rule before relying on the result.
If you’re calculating in a non-U.S. currency, check your local tax authority’s treatment of vehicle trade-ins, since this convention is specific to U.S. sales tax law. Adding that sales tax to the price, then subtracting your down payment and trade-in, gives the amount financed, or principal ($P$).
The monthly interest rate ($r$) is the annual rate divided by 12, and the number of payments ($n$) equals the loan term in months. The calculator then applies the standard loan amortization formula, the present-value-of-annuity calculation used across consumer lending, per the Consumer Financial Protection Bureau’s explanation of how auto loan amortization works:
$$M = P \times \frac{r(1+r)^n}{(1+r)^n – 1}$$
A common input mistake is entering the interest rate as a decimal, such as 0.05 instead of 5, which the calculator reads as 0.05% rather than 5% and produces a payment far lower than any real lender would offer.
- Entering a loan term in years, such as “5,” into the custom months field instead of converting it to months (60).
- Using the vehicle’s advertised or MSRP price instead of the negotiated purchase price plus dealer fees, which understates the amount actually financed.
Auto price, down payment, trade-in value, and sales tax must be zero or greater; the calculator flags negative entries rather than computing a result. An interest rate of 0% is valid and switches the formula to a straight-line division of principal by the number of months, since the amortization formula above is undefined at $r = 0$.
Loan terms are practically bound by what auto lenders actually offer, roughly 24 to 84 months; a term outside that range, such as 600 months, still produces a mathematically valid payment, but no U.S. auto lender offers financing on that timeline, so the output wouldn’t reflect a real loan product. If your down payment and trade-in together cover the full price, the amount financed is set to zero and no loan is needed.
Because the actual APR, fees, and add-ons a lender quotes can differ from what you enter here, the monthly payment and total interest shown are an estimate for comparison and education rather than a binding loan offer, and this tool does not replace the truth-in-lending disclosure a lender is required to provide or personalized financial advice.
Principal vs. Interest Split Over a 60-Month Loan
The chart below applies the formula above to a $30,000 loan at 6% APR over 60 months, showing how the same monthly payment splits between principal and interest as the loan matures. Early payments are interest-heavy; by the final months, nearly the entire payment reduces principal.
Auto Loan Payment Questions Answered
Does a bigger down payment lower my interest rate?
No. Your down payment reduces the amount financed, which lowers your monthly payment and total interest, but it does not change the rate itself. The rate is set separately by the lender based on your credit profile, term, and market conditions.
Does trading in a vehicle always reduce sales tax?
Not everywhere. Most states subtract your trade-in value from the taxable price before tax is applied, but California, Virginia, Hawaii, and Washington, D.C. tax the full purchase price regardless of a trade-in, so confirm your state’s rule before entering a value.
Why does a longer loan term lower my payment but raise my total cost?
Spreading the same principal over more months lowers each monthly payment, but you pay interest for a longer period, so total interest paid rises even though the rate itself may be lower on a shorter term.
What’s the difference between the rate I enter and my APR?
This calculator’s rate field assumes a nominal annual rate compounded monthly, which is close to the APR a lender quotes. APR may also include certain finance charges the base rate doesn’t, so your lender’s exact quoted APR is the number to enter.
Why did the calculator show a flat payment with no interest?
That happens when you enter 0% for the interest rate. Without interest, the loan formula divides the amount financed evenly across the loan term, so every monthly payment is identical and consists entirely of principal.