Monthly Car Payment Calculator
Computes your exact monthly auto loan payment from vehicle price, down payment, sales tax, interest rate, and loan term. Use it when shopping for a car to set a realistic budget.
About this calculator
Auto loan payments follow the standard amortization formula. First, the financed amount (principal P) is calculated as: P = vehiclePrice − downPayment + (vehiclePrice × salesTax / 100). The monthly interest rate r = annualRate / 100 / 12, and n is the number of monthly payments (loan term). The monthly payment M is then: M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1). This formula ensures each payment covers the month's accrued interest plus a portion of principal, so the balance reaches exactly zero on the final payment. Sales tax is rolled into the financed amount because most buyers finance the full out-the-door price. A longer loan term lowers the monthly payment but increases total interest paid over the life of the loan.
How to use
Scenario: $30,000 car, $5,000 down payment, 6% annual interest, 60-month term, 8% sales tax. Step 1 — Principal: P = 30,000 − 5,000 + (30,000 × 0.08) = 25,000 + 2,400 = $27,400. Step 2 — Monthly rate: r = 6 / 100 / 12 = 0.005. Step 3 — Payment: M = 27,400 × 0.005 × (1.005)⁶⁰ / ((1.005)⁶⁰ − 1) = 137 × 1.3489 / 0.3489 ≈ $529.29 per month. Over 60 months you pay $31,757 total, meaning $4,357 goes to interest.
Frequently asked questions
How does the loan term length affect total interest paid on a car loan?
Extending the loan term lowers your monthly payment but significantly increases the total interest you pay. On a $25,000 loan at 6%, a 48-month term costs roughly $1,580 in interest, while a 72-month term costs about $4,750 — three times more. Lenders also tend to charge higher interest rates for longer terms. Unless cash flow is critically tight, shorter loan terms almost always produce a better financial outcome.
Why is sales tax added to the financed amount instead of paid upfront?
Most buyers roll sales tax into the loan because paying it upfront requires additional cash at closing. When included in the financed amount, tax becomes part of the principal on which interest accrues over the entire loan term. This is mathematically more expensive than paying tax out of pocket at purchase. If you can afford to pay sales tax separately, you will reduce your principal and therefore your monthly payment and total interest costs.
What interest rate should I expect on a new car loan?
Interest rates on auto loans depend heavily on your credit score, loan term, and whether the vehicle is new or used. As of recent data, buyers with excellent credit (750+) typically qualify for rates between 4–6% on new cars, while subprime borrowers may face 15–20% or higher. Used car loans generally carry rates 1–3 percentage points above new car rates. Shopping multiple lenders — including credit unions, which often beat dealer financing — can save thousands of dollars over the loan's life.