Car Loan Payment Calculator
Calculate your monthly car loan payment including sales tax rolled into the financed amount. Ideal for budgeting before visiting a dealership or applying for auto financing.
About this calculator
This calculator uses the standard amortization formula adapted to include sales tax in the financed balance. The effective loan principal is (loanAmount − downPayment) × (1 + salesTax / 100). The monthly payment formula is then: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the tax-adjusted principal, r is the monthly interest rate (annualRate / 12 / 100), and n is the loan term in months. This ensures the sales tax is spread across all payments rather than paid upfront. The result is the fixed monthly installment needed to fully pay off the loan by the end of the term, assuming no extra payments.
How to use
Assume a car priced at $25,000 with a $3,000 down payment, 6% annual interest, 60-month term, and 8% sales tax. Adjusted principal = ($25,000 − $3,000) × 1.08 = $22,000 × 1.08 = $23,760. Monthly rate r = 0.06 / 12 = 0.005. M = $23,760 × [0.005 × (1.005)^60] / [(1.005)^60 − 1] = $23,760 × [0.005 × 1.3489] / [0.3489] ≈ $23,760 × 0.01933 ≈ $459.30 per month. Enter these values to see your estimated monthly payment instantly.
Frequently asked questions
How does sales tax affect my monthly car loan payment?
When sales tax is rolled into the loan rather than paid upfront, it increases the financed principal and therefore every monthly payment. For example, an 8% sales tax on a $22,000 financed amount adds $1,760 to the loan balance. That extra amount is then subject to interest over the full loan term, meaning you pay even more than the tax itself. Paying sales tax out of pocket at purchase is cheaper in the long run if you can afford it.
What is a good interest rate for a car loan?
A good car loan interest rate depends heavily on your credit score and the loan term. As of recent years, borrowers with excellent credit (750+) can expect rates around 4–6% for new cars, while those with fair credit may see 10–15% or higher. Used car loans typically carry higher rates than new car loans. Shopping multiple lenders—including banks, credit unions, and dealership financing—can help you secure the most competitive rate.
How does the loan term length affect total car loan cost?
A longer loan term lowers your monthly payment but significantly increases the total interest paid over the life of the loan. For example, a $20,000 loan at 6% costs about $2,582 in total interest over 36 months versus $3,322 over 60 months. Stretching to 72 or 84 months can save hundreds per month but may cost thousands more overall. Shorter terms also reduce the risk of becoming upside-down on the loan as the car depreciates.