Car Loan Calculator

Background.

A car loan calculator turns the four or five numbers on a buyer's order into the only figures that should drive your purchase decision: what the vehicle costs you every month, what it costs you in interest, and what it actually costs you in total once the loan is paid off. Enter the negotiated vehicle price, your cash down payment, the credit you are getting for a trade-in, the sales tax rate in your state, any documentation or registration fees you are rolling into the loan, the APR your lender has approved, and the term in months, and the calculator runs the standard amortizing-loan formula plus the loan-amount derivation that almost every dealer F&I office uses. The output is your scheduled monthly payment, the principal you are actually financing once tax and fees are layered in, the total interest you will pay across the life of the loan, and an all-in total cost figure that is the closest thing to a true price tag on the vehicle.

How an auto loan works mechanically is no different from a mortgage or a personal loan — interest accrues every month on the remaining balance, you pay a fixed installment that retires both interest and principal, and the loan ends when the balance hits zero. What makes auto loans distinctive is the speed at which the asset depreciates relative to the speed at which the loan amortizes. A new car drops 20 to 30 percent in market value the moment you drive it off the lot, then loses another 15 to 20 percent over the first year. A typical 72- or 84-month loan, by contrast, takes two to three years just to chip the balance down by a comparable percentage — which is how borrowers end up "upside down" or in negative equity, owing more on the loan than the car is worth.

Three controls determine whether you stay right-side up. The first is the down payment: putting at least 20 percent down on a new car (or 10 percent on a used car) gives the loan a head start that depreciation cannot immediately erase. The second is the term: a 60-month loan amortizes fast enough that most borrowers cross into positive equity within the first 18 months; an 84-month loan can leave you underwater for the first four years. The third is the price itself — stretching the budget by lengthening the term to fit a more expensive car is the single most common mistake in the new-car market, and it is exactly what gives dealers room to upsell into trim levels and add-on packages.

The trade-in math also matters in ways that surprise first-time buyers. In most U.S. states, the dealer subtracts the trade-in value from the vehicle price before applying sales tax, so a $5,000 trade-in on a $30,000 car at a 7% rate saves you $350 in tax on top of the $5,000 reduction in the loan amount itself. Financing taxes and fees, on the other hand, costs you real money — every dollar rolled into the loan accrues interest at the APR for the full term, so a $500 doc fee on a 72-month loan at 7% costs you roughly $115 in interest, not $500.

This calculator gives you the monthly payment, the financed amount, the total interest, the all-in cost, and the payoff time. The explainer below walks through how to read each one, when a longer term actually makes sense, the 20/4/10 rule that most personal-finance writers use as a sanity check, and the difference between gap insurance and the optional warranty products the dealer will try to sell you in the F&I office.

What is car loan calculator?

An auto loan is an installment loan secured by the vehicle being financed. The lender disburses a lump sum to the dealer (covering the vehicle price plus sales tax and any financed fees, minus your down payment and trade-in), and you repay that principal plus interest in equal monthly installments under an amortization schedule. Each monthly payment is split between an interest charge — computed against the outstanding balance — and a principal reduction that brings the balance down. Because interest is charged on the unpaid balance, early payments are mostly interest and later payments are mostly principal. The lender holds a lien on the vehicle title until the loan is paid off; if you stop paying, the lender can repossess and sell the vehicle to recover the balance. Two terms come up constantly in auto-finance conversations and trip people up. The interest rate is the percentage used to calculate the monthly finance charge against the outstanding balance. The APR (annual percentage rate) is a federally-mandated disclosure under the Truth in Lending Act that bundles the interest rate with most lender fees — origination, certain documentation costs — annualized over the loan term. For most prime auto loans the rate and APR are within a fraction of a point of each other; for subprime loans the gap can widen meaningfully. "Upside down" or "underwater" describes a loan whose balance exceeds the vehicle's market value — almost guaranteed in the first year of a long-term loan with a small down payment because depreciation outruns amortization. Gap insurance covers the difference between what the car is worth and what you still owe if the vehicle is totaled or stolen while you are upside down. This calculator models the standard fixed-rate fully-amortizing auto loan that accounts for the vast majority of new and used vehicle financing in the United States. It does not model lease payments, simple-interest loans where interest accrues daily, balloon loans, or buy-here-pay-here arrangements with weekly payment schedules.

How to use this calculator.

1. 01Enter the vehicle price you negotiated with the dealer — the out-the-door price line on the buyer's order, before sales tax. Do not enter MSRP unless that is what you actually agreed to pay.
2. 02Enter your cash down payment. Personal-finance writers and the Consumer Financial Protection Bureau suggest at least 20% down on a new car and 10% on a used car to stay ahead of depreciation; if you cannot meet that threshold, consider a less expensive vehicle rather than a longer loan term.
3. 03Enter the trade-in value the dealer is crediting toward the purchase. In most U.S. states this amount is subtracted from the vehicle price before sales tax is calculated, so the trade-in saves you both loan principal and a slice of tax. Confirm the tax treatment in your state.
4. 04Enter the combined state and local sales tax rate on vehicles. The U.S. average is about 6–7%; Oregon, Montana, New Hampshire, Delaware, and Alaska have no statewide vehicle sales tax; California, Tennessee, and several others exceed 9% when local rates are layered in.
5. 05Enter any documentation, title, registration, or dealer fees you plan to roll into the loan rather than pay in cash. Every dollar financed accrues interest at the APR for the full term — consider paying these fees out of pocket if you can.
6. 06Enter the APR the lender quoted. If you have not yet shopped lenders, the Federal Reserve's G.19 release publishes the prevailing averages by credit tier each quarter; new-car APRs in early 2026 averaged 7–8% for prime borrowers and 11–13% for non-prime.
7. 07Choose a term in months. 60 months is the canonical sweet spot for new cars; 36 or 48 months minimizes lifetime interest if you can afford the higher payment; 72 or 84 months should be a last resort because of the negative-equity risk.

The formula.

The calculator computes the loan amount and the monthly payment in two steps. The loan amount derivation is: taxable base = max(0, vehicle price − trade-in value); tax amount = taxable base × sales tax rate; loan amount = vehicle price − down payment − trade-in value + tax amount + fees financed. This mirrors the standard U.S. F&I office worksheet — tax is assessed on the price net of trade-in (the convention in most states), and the financed amount includes the tax and any rolled-in fees because that is what the lender actually has to fund. The monthly payment then uses the standard amortizing-loan formula M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly periodic rate (annual rate ÷ 100 ÷ 12), and n is the number of monthly payments. For the rare zero-percent promotional financing case the formula collapses to M = P / n. Total interest is M × n − P, and the all-in cost is vehicle price + tax + fees + total interest − trade-in credit. All currency arithmetic uses arbitrary-precision decimal math to avoid the floating-point rounding errors that show up in spreadsheet implementations on long terms.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Consumer Financial Protection Bureau — Auto loans (consumer guide to shopping, APR, term, and negative equity)
2. [2]Consumer Financial Protection Bureau — Understand and choose an auto loan
3. [3]Federal Reserve — G.19 Consumer Credit release (monthly series on new and used auto loan rates, terms, and amounts financed)
4. [4]Bankrate — Auto Loan Calculator methodology and prevailing-rate research
5. [5]Edmunds — True Cost to Own (5-year ownership cost methodology including depreciation, financing, insurance, fuel, and maintenance)
6. [6]Truth in Lending Act, 15 U.S.C. §1601 et seq. — Regulation Z disclosure requirements for APR, finance charge, and prepayment penalties