Auto Loan Calculator

What this computes

The dealer quotes a monthly payment. That number alone hides three things: how much of it is interest, what the loan costs in total, and how the sales-tax and trade-in interaction changes the amount you actually finance. This calculator shows all of it.

Enter the price, down payment, trade-in, term, and APR. It computes the sales tax (on price minus trade-in, or full price depending on your state), the amount financed, the monthly principal-and-interest payment, total interest, and a year-by-year amortization. Add an extra monthly amount to see how much interest and time that saves.

The math

The amount financed is built up first:

Sales tax       = (price − trade-in) × tax rate   [most states]
Amount financed = price + sales tax − down − trade-in

Then the standard amortization formula gives the payment:

M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]

Where P is the amount financed, r is the monthly rate (APR ÷ 12), and n is the term in months. Each month, interest is balance × r and the remainder of the payment reduces principal. Extra principal each month shortens the schedule and reduces total interest because interest is always charged on the lower remaining balance.

A worked example

$35,000 car, $4,000 down, no trade-in, 7% sales tax, 60-month term at 6.9% APR.

• Sales tax: $35,000 × 0.07 = $2,450
• Amount financed: $35,000 + $2,450 − $4,000 = $33,450
• Monthly payment: ≈ $661
• Total interest over 60 months: ≈ $6,200

That $6,200 is roughly 19% on top of what you financed — invisible in the "$661/month" the dealer leads with.

The monthly payment is the dealer's lever. Total interest is the number that decides if the deal is good.

How to use this

1. Negotiate the price first, financing second. Dealers blur the two. Settle the out-the-door price, then put it in the price field and evaluate financing separately.
2. Bring an outside pre-approval. Get a credit-union or bank rate before you go. Enter that APR here; if the dealer beats it, great — if not, you have the better loan in hand.
3. Set your state's tax treatment. Most states credit the trade-in; toggle "Tax the full price" if yours (CA, VA, etc.) doesn't. It changes the financed amount by hundreds.
4. Compare 48 vs 60 vs 72 months. Watch total interest, not just the monthly. The longer-term "affordable" payment usually costs thousands more and keeps you underwater longer.

The long-term trap

Auto loans have stretched from a 48-month norm to 72-and-84 month terms, marketed on the lower monthly payment. The math is unfavorable in two ways:

• More total interest. Interest accrues for more months on a more slowly-declining balance. A 72-month loan can cost 60-90% more total interest than a 48-month loan on the same car and APR.
• Longer underwater. Cars depreciate faster than a long loan amortizes. On a 72+ month loan you can owe more than the car is worth for the first 3-4 years — a problem if you total it, want to sell, or need to trade.

The rule of thumb that survives scrutiny: if you can't afford the car on a 48-month term with at least 10-20% down, you're buying more car than your budget supports. The longer term isn't making it affordable; it's hiding that it isn't.

What this calculator doesn't model

• Dealer add-ons. Extended warranties, gap insurance, paint protection, etc. are often financed into the loan, increasing the amount financed beyond what's modeled here. Add them to the price field if they're non-negotiable.
• Promotional 0% vs rebate. Manufacturer 0% APR offers often require forgoing a cash rebate. Model both: 0% on full price vs market APR on (price − rebate).
• Variable / balloon structures. This assumes a fixed-rate fully-amortizing loan. Balloon loans and variable-rate financing behave differently.
• Total cost of ownership. The loan is one line. Fuel, insurance, maintenance, and depreciation are the rest — see the True Cost of Ownership calculator for the full picture.