Auto Loan Calculator
Estimate your monthly auto loan payment by entering the car price, down payment, trade-in value, interest rate, loan term, and local sales tax. Ideal for comparing financing offers before visiting a dealership.
About this calculator
This calculator uses the standard amortization formula to find your monthly car payment. First, it adjusts the car price for sales tax, then subtracts your down payment and trade-in value to get the net loan amount. The formula is: Monthly Payment = [L × (r × (1+r)^n)] / [(1+r)^n − 1], where L is the net loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (loan term in years × 12). The net loan amount is: L = carPrice × (1 + salesTaxRate/100) − downPayment − tradeValue. This gives you the true cost of financing after all upfront reductions are applied.
How to use
Suppose a car costs $30,000, you pay $3,000 down, trade in a vehicle worth $2,000, face a 7% sales tax, borrow at 5% annual interest, and choose a 5-year term. Net loan = $30,000 × 1.07 − $3,000 − $2,000 = $27,100. Monthly rate r = 5% ÷ 12 = 0.004167. n = 60 months. Payment = $27,100 × (0.004167 × 1.004167^60) / (1.004167^60 − 1) = $27,100 × 0.005305 / 0.2834 ≈ $510.84 per month.
Frequently asked questions
How does a trade-in value reduce my auto loan payment?
Your trade-in value is subtracted from the net purchase price before the loan amount is calculated, effectively acting like an additional down payment. This reduces the principal you need to finance, which lowers both the monthly payment and total interest paid over the life of the loan. For example, a $2,000 trade-in on a 5-year loan at 5% APR saves roughly $38 per month. Always negotiate the trade-in and purchase price separately to maximize its benefit.
What is a good interest rate for a car loan in 2024?
A good auto loan rate depends on your credit score and the loan term. Borrowers with excellent credit (750+) typically qualify for rates between 5% and 7% for new cars; used car rates are generally 1–3% higher. Credit unions often offer lower rates than dealerships. Rates above 15% significantly increase total cost and are common for subprime borrowers. Shopping multiple lenders before visiting the dealership gives you leverage to negotiate.
How does loan term length affect total interest paid on a car loan?
A longer loan term lowers your monthly payment but dramatically increases the total interest you pay over time. For instance, a $25,000 loan at 6% APR costs about $483/month over 48 months (total interest ≈ $1,184) versus $386/month over 72 months (total interest ≈ $2,779). Longer terms also increase the risk of being 'underwater,' meaning you owe more than the car is worth. Financial experts generally recommend terms of 48–60 months for the best balance between payment and total cost.