Estimate your monthly car payment and total loan cost from price, down payment, trade-in, sales tax, term, and APR.
How Auto Loan Payments Work
An auto loan is an amortizing loan: each fixed monthly payment covers the interest accrued that month, and the rest reduces your principal. Early payments are mostly interest; later payments are mostly principal. Your monthly amount depends on the amount financed, the APR, and the loan term.
What Gets Financed
The amount financed is the vehicle price plus sales tax, minus your down payment and any trade-in value. A larger down payment or trade-in lowers the loan, which reduces both the monthly payment and the total interest you pay over the life of the loan.
Why Loan Term Matters
Stretching a loan to 72 or 84 months lowers the monthly payment but raises total interest substantially, and it increases the risk of owing more than the car is worth. A shorter term costs more per month but far less overall and builds equity faster.
Tip: Get pre-approved for financing from your bank or credit union before visiting the dealer. A competing offer gives you leverage and protects you from marked-up dealer financing rates.
Frequently Asked Questions
How is my monthly car payment calculated?
It uses the loan amortization formula based on the amount financed, the monthly interest rate (APR ÷ 12), and the number of months. The amount financed is the price plus sales tax minus your down payment and trade-in.
Is sales tax included in my auto loan?
In most states, sales tax can be rolled into the financed amount. This calculator adds the sales tax to the price before subtracting your down payment and trade-in. Some states tax the price after the trade-in is deducted.
Should I choose a longer loan term to lower my payment?
A longer term lowers the monthly payment but increases total interest and the chance of being underwater on the loan. When affordable, a shorter term saves money and builds equity faster.
How much should I put down on a car?
A common guideline is at least 20% down on a new car and 10% on a used car. A larger down payment reduces your loan, your interest, and the risk of owing more than the vehicle is worth.
What APR can I expect on an auto loan?
Auto loan APRs depend heavily on your credit score, the loan term, and whether the car is new or used. Borrowers with strong credit qualify for the lowest rates, so check your score before shopping.