Car Loan Calculator — What Will That Car Actually Cost Per Month?
True monthly payment with trade-in, taxes, and down payment factored in — not just the dealer quote
Reviewed for accuracy June 21, 2026 by Gary S.
Varies by state — typically 4–10%
19% of financed amount paid in interest at 7% APR
Over 60 months, you'll pay $5,642.16 in interest on $30,000.00 financed. The 20/4/10 rule: 20% down, max 48-month term, payment ≤ 10% of take-home pay.
- ›Pay $50/month extra → 5 fewer months and $220.18 less interest
- ›Total interest ($5,642.16) is 19% of the amount financed
- ›A 20% down payment ($7,000.00) reduces the financed amount and eliminates early underwater risk
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How to use Car Loan Calculator
Free car loan calculator. Enter vehicle price, down payment, trade-in value, sales tax, interest rate, and term. See your monthly payment, total interest paid, and true cost of the car.
A car loan calculator shows your monthly auto loan payment and true vehicle cost before you set foot in a dealership. Unlike a basic loan calculator, auto loan calculations typically include a down payment, a trade-in vehicle value that reduces the financed amount, and sales tax on the purchase price. Enter all of these variables to see the exact amount you will be financing, your monthly payment, total interest paid, and what the car actually costs over the full loan term.
How to use this Car Loan Calculator
- 1Enter the vehicle price — the agreed purchase price (or MSRP if you haven't negotiated yet).
- 2Enter your down payment. More down means a smaller loan, lower payment, and less interest.
- 3Enter your trade-in value if you have a vehicle to trade. This directly reduces the financed amount.
- 4Enter the sales tax rate for your state (typically 4–10%). Tax is applied to the vehicle price before subtracting trade-in in most states.
- 5Enter the loan interest rate and term in months (48, 60, 72, or 84 months are most common). Read your monthly payment and total interest.
Auto loan payment formula explained
The financed amount on a car loan is the vehicle price plus taxes and fees, minus your down payment and trade-in value. That net amount is then run through the standard amortisation formula to produce your monthly payment.
| Variable | Meaning |
|---|---|
| M | Monthly payment |
| Financed | Net loan amount after down payment and trade-in |
| r | Monthly interest rate (annual rate ÷ 12) |
| n | Loan term in months (e.g. 60 for 5 years) |
| TaxRate | State sales tax rate as a decimal (e.g. 0.07 for 7%) |
Auto loan example: $35,000 car, $5,000 down, $3,000 trade-in at 7% for 60 months
- 01Vehicle price: $35,000. Sales tax (7%): $2,450. Price + tax: $37,450.
- 02Down payment: $5,000. Trade-in value: $3,000. Total deductions: $8,000.
- 03Financed amount: $37,450 − $8,000 = $29,450.
- 04Monthly rate r = 0.07 ÷ 12 = 0.005833. Term n = 60 months.
- 05Monthly payment = $29,450 × [0.005833 × (1.005833)^60] / [(1.005833)^60 − 1] = $583.11
Result
Monthly payment: $583.11. Total paid: $34,986.60. Total interest: $5,536.60. True vehicle cost: $42,986.60 (including down + trade-in + payments).
What affects your monthly car payment?
Loan term length
Longer terms (72–84 months) produce lower monthly payments but significantly more total interest — and risk negative equity (owing more than the car is worth). A 60-month term is the longest generally recommended by financial advisors. Each additional year on a $30,000 loan at 7% costs roughly $800–$1,200 in additional interest.
Down payment
A larger down payment reduces the financed amount, lowers your payment, and reduces the risk of going underwater on the loan. The 20/4/10 rule: 20% down, loan term no longer than 4 years, monthly payment no more than 10% of gross monthly income.
Trade-in value
Get a trade-in quote from CarMax, Carvana, or KBB Instant Cash Offer before entering the dealership. Dealers often undervalue trade-ins when they're bundled with a new purchase negotiation. A separate trade-in sale gives you more leverage and a clearer picture of the real deal.
Interest rate and credit score
Auto loan rates vary dramatically by credit score. Excellent credit (750+) can get 4–6%. Good credit (670–749) typically sees 7–10%. Below 600, rates can exceed 18–20%. Getting pre-approved by your bank or credit union gives you a rate to negotiate against at the dealership.
New vs used
New car loans typically carry lower interest rates than used car loans (lenders consider used cars higher risk). However, new cars depreciate 15–25% in the first year. Used cars 3–4 years old offer the best balance of lower price, reasonable depreciation, and still-available financing rates.
Dealer financing vs bank/credit union
Dealers make money on financing — the rate they quote is often marked up from the rate the lender actually offers (the buy rate). Get pre-approved before the dealership. Banks and credit unions typically offer 0.5–2% lower rates than dealer financing on the same loan profile.
Tips and things to know
- ✓Get pre-approved for an auto loan from your bank or credit union before shopping. The pre-approval rate is your ceiling — the dealer has to beat it or you use your own financing.
- ✓Negotiate the vehicle price first, completely separately from your trade-in and financing. Dealers bundle all three to obscure the real numbers on each.
- ✓Do not extend the loan term to make a car "affordable." If a 48-month loan payment exceeds 10–15% of your take-home pay, the car is too expensive for your budget.
- ✓Add 15–20% to the sticker price for taxes, registration, dealer fees, and first-year insurance to calculate the true cost of purchasing the vehicle.
- ✓On loans over 60 months, verify GAP insurance is included — if the car is totalled, standard insurance pays market value, which may be less than your remaining loan balance.
Car Loan Calculator — bottom line
The biggest mistake car buyers make is negotiating around the monthly payment rather than the total price. Dealers know that most buyers have a payment number in mind and will adjust the loan term or the vehicle price to hit that number, often adding thousands in total cost. A buyer focused on total price is a much stronger negotiator than one focused on the payment. Use this calculator to lock in your maximum total financed amount first, then use the monthly payment as a check. A critical second mistake is not factoring depreciation into the deal. New cars lose 15–25% of value in the first year. If you finance 90–100% of a new car's purchase price, you are immediately underwater — you owe more than the car is worth. This creates a problem when you want to sell or trade in: you'll owe money out of pocket to close the loan. The break-even calculation: a $35,000 new car at 7% for 60 months costs $691/month and $6,472 in interest. The same model one year old at $27,000 at the same rate costs $535/month and $5,079 in interest — $156 less per month, $1,393 less in total interest, while starting with $8,000 less in depreciation risk. Before visiting a dealership, use this calculator to determine your maximum financed amount, your maximum acceptable term, and the monthly payment at a rate 1% higher than your best-case scenario. Then run the Vehicle Depreciation Calculator to understand the full 5-year cost of ownership for the specific vehicle you're considering.
Official resources and further reading
Consumer Financial Protection Bureau — Auto Loans
The CFPB's official auto loan guide covering how dealers mark up financing rates, what to watch for in loan contracts, and how to compare offers.
Kelley Blue Book — Vehicle Values
The industry-standard source for new and used vehicle pricing, trade-in values, and fair purchase price ranges — essential before any car negotiation.
National Credit Union Administration — Auto Loan Rates
The NCUA's guide to credit union auto loan rates — credit unions typically offer 0.5–2% lower rates than bank or dealer financing.
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Frequently asked questions
As of 2026, excellent credit (750+) can get auto loan rates of 4–6% for new cars and 5–8% for used. Good credit (670–749) typically sees 7–10%. Below 600, rates often exceed 15–20%. Always get pre-approved by your bank or credit union before visiting a dealership — their rate is your negotiating baseline.
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