Car Interest Calculator estimates the monthly payment, total interest, and total borrowing cost of an auto loan based upon the vehicle price, APR, term, and down payment entered.
Calculate Monthly Payment and Total Interest on a New or Used Car Loan
This calculator turns a vehicle’s price, down payment, trade-in value, sales tax rate, dealer fees, APR, and loan term into an estimated monthly payment and total borrowing cost. It’s used by car shoppers comparing financing offers, buyers deciding how a trade-in or down payment changes their payment, and anyone budgeting for the full out-the-door cost of a vehicle rather than just the sticker price.
Entering Your Vehicle Price, Financing Terms, and Trade-In Details
Enter the vehicle price, down payment, trade-in value, and dealer fees in your currency, plus the sales tax rate and loan term in months. Enter the Interest Rate as the APR — the calculator treats it as a nominal annual rate divided by 12 to get a monthly rate, then compounds monthly over the loan term.
How Monthly Payment and Total Interest Are Calculated
The calculation runs in two stages: first it works out how much you actually finance, then it applies the standard loan amortization formula to that amount.
$$Tax_{base} = \max(Price – Trade{\text -}In,\ 0)$$
$$Tax = Tax_{base} \times r_{tax}$$
$$Principal = (Price + Tax + Fees) – (Down + Trade{\text -}In)$$
$$M = P \times \dfrac{i(1+i)^n}{(1+i)^n – 1}$$
Here $P$ is the financed principal, $i$ is the monthly periodic rate ($APR \div 12$), $n$ is the loan term in months, and $M$ is the fixed monthly payment. If the APR is 0%, the formula above is undefined (division by zero), so the calculator falls back to a simple $M = P / n$ with no interest charged.
This is the standard fixed-rate amortization formula — the same present-value-of-an-annuity formula used across U.S. auto and mortgage lending, and referenced in the Consumer Financial Protection Bureau’s consumer guidance on how auto loan amortization works. It is a verified financial formula, not a rule of thumb.
A lender’s disclosed Truth-in-Lending APR can include certain finance charges in addition to the note interest rate, under Regulation Z, so a quoted APR may produce a slightly different payment than the plain interest rate used here — this calculator assumes the entered rate is the actual rate applied to the loan balance, compounded monthly rather than daily or continuously.
One interaction worth knowing before you rely on the tax figure: the calculator reduces the taxable amount by your Trade-In Value but not by your Down Payment, since only an in-kind vehicle trade — not cash — typically reduces a sales-tax base.
This trade-in sales-tax credit is state law, not a federal or universal rule: most states allow it, but several, including California, Hawaii, and Virginia, tax the full purchase price regardless of trade-in value, and the list of exceptions has changed in recent years. Confirm the current treatment with your state’s department of revenue or motor vehicles before treating the tax estimate as final.
A common input mistake is entering the sales tax rate as a decimal (0.07) instead of a whole percentage (7) — this understates tax by a factor of 100. Two others to watch for:
- Entering the loan term in years instead of months (typing “5” for a 5-year loan when the field expects “60”).
- Entering a trade-in’s full value without subtracting any loan balance still owed on it — negative equity on a trade reduces the real credit applied to the new purchase, and this calculator doesn’t net that out automatically.
Vehicle price, down payment, trade-in value, and fees must be zero or greater, and the loan term must be greater than zero months, since a payment can’t be computed over zero periods.
If Down Payment plus Trade-In Value exceeds the total price, tax, and fees combined, the financed principal floors at $0 and the payment shows as $0 — the calculator doesn’t display a resulting cash refund, so treat a $0 result as “no loan needed,” not a literal $0 cost.
The Loan Term field accepts any positive whole number of months, but real-world new-vehicle financing is rarely offered past 84 months and used-vehicle terms rarely past 72 months; an unrealistic term such as 240 months will still compute a mathematically valid payment that isn’t representative of an actual available loan product.
Because sales tax treatment of trade-ins, dealer fee structures, and lender-specific APR calculations vary by state and by lender, treat this output as an educational estimate of your likely payment and financing cost — not a loan offer, a tax filing figure, or personalized financial, legal, or tax advice.
How the Payment Splits Between Interest and Principal Over the Loan Term
Answers to Common Car Loan Payment Questions
Does the APR I enter match what a lender will quote me?
Not necessarily. This calculator treats the entered rate as the exact rate applied monthly to the balance. A lender’s disclosed Truth-in-Lending APR can bundle in certain finance charges, per Regulation Z, so the quoted APR and the note rate can differ slightly.
Why does a larger trade-in reduce more than just my loan amount?
A trade-in typically reduces both the amount you need to finance and, in most states, the taxable purchase price — cash down payments only do the former. This tax treatment is state-specific, so confirm it applies in your state.
What happens if I set the interest rate to 0%?
The standard amortization formula can’t be used at exactly 0%, since it would divide by zero. The calculator instead divides the financed amount evenly across the loan term, showing $0 in total interest.
Does my down payment reduce the sales tax I owe?
Generally no. In most states, only a traded-in vehicle reduces the taxable purchase price; cash put down as a down payment is not treated the same way for sales-tax purposes, though this calculator lets you confirm the effect either way.
Is there a limit to how long a car loan term can be?
The calculator itself accepts any term greater than zero months, but real auto lenders rarely extend new-car loans past 84 months or used-car loans past 72 months, so very long terms entered here won’t reflect an actually available loan.