Auto Loan Calculator
Evaluate total vehicle cost factoring in trade-in value, sales tax, down payment, and dealer fees.
Parameters & Inputs
Summary & Breakdown
Vehicle Outlay Composition
Financing Breakdown
About the Auto Loan Calculator
Buying a new or pre-owned vehicle requires assessing total outlay rather than simply negotiating monthly dealership quotes. Auto dealerships frequently stretch financing to 72 or 84 months to make vehicles seem affordable, dramatically increasing the lifetime finance charges you pay on a depreciating asset.
This auto loan calculator computes your monthly installment while accounting for down payments, trade-in credit allowances, and state or municipal sales taxes.
By evaluating your loan with clear mathematical models before visiting dealerships, you maintain negotiation power and select repayment terms that protect your personal balance sheet.
How the Calculations Work
Calculations determine net vehicle cost after trade-in and down payment, add sales tax, and amortize the remaining balance over the chosen monthly schedule.
Financed = Price - Down - Trade + [(Price - Trade) * Tax%], Payment = Financed * [r(1 + r)^n] / [(1 + r)^n - 1]
Variables & Definitions
- Price: Negotiated vehicle sale price before tax and title fees
- Down: Cash down payment provided at purchase
- Trade: Net equity trade-in allowance for your current vehicle
- r: Monthly interest rate (APR / 12 / 100)
- n: Total loan term in months (e.g. 36, 48, 60, 72)
A $35,000 vehicle with $5,000 down payment, $4,000 trade-in, and 6.5% sales tax on the net $31,000 creates a tax charge of $2,015. Total amount financed is $28,015. At 5.9% APR over 60 months, monthly payments are $516.48 with $4,474 in total lifetime interest.
Key Terms Explained
Trade-in Equity
The value granted by the dealership for your existing vehicle, which reduces taxable purchase amount in many states.
Negative Equity
When you owe more on your existing vehicle loan than the vehicle is currently worth.
GAP Insurance
Coverage paying the difference between actual cash vehicle value and remaining loan balance in a total loss.
Depreciation
The decline in vehicle market value over time, often exceeding 20% in the first year of ownership.
Practical Tips & Pitfalls to Avoid
Aim for the 20/4/10 guideline
Put 20% down, finance for no longer than 4 years (48 months), and keep total vehicle expenses under 10% of gross income.
Secure pre-approval from credit unions
Independent bank or credit union financing pre-approval establishes a benchmark and prevents dealer markup on APR.
Beware of 84-month terms
Loans longer than 60 months drastically increase odds of remaining underwater (owing more than car market value).
Check trade-in tax credits
Most states only levy sales tax on the purchase price minus trade-in value, delivering immediate tax savings.
Frequently Asked Questions
Financial advisors recommend putting down at least 10% on used cars and 20% on new cars to offset initial depreciation and avoid negative equity.
An 84-month loan reduces monthly payments compared to a 48-month loan, but typically doubles your total interest paid and leaves you underwater for years.
Most auto loans use simple interest computed daily based on remaining principal balance, meaning early payments reduce total interest charges.
In most US states, sales tax applies only to the net difference between vehicle price and trade-in value, saving you sales tax dollars.
Yes. If your credit score improves or interest rates drop, refinancing to a lower rate or shorter term can reduce your monthly payment and interest.