How is my auto loan monthly payment calculated?

Your monthly payment is calculated using the standard amortization formula M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount (vehicle price minus down payment and trade-in), r is the monthly interest rate, and n is the number of payments (years × 12). Sales tax is paid upfront on the taxable amount (price minus trade-in) and is not financed.

Should I make a down payment on a car?

Yes. A down payment of at least 10%–20% of the vehicle price is recommended. It reduces the loan amount, lowers your monthly payment, cuts total interest, and helps you avoid being 'upside down' (owing more than the car is worth) during the first few years when depreciation is steepest.

What is a good interest rate for a car loan?

As of 2026, typical new-car rates range from 5%–8% for borrowers with good credit (700+). Used-car rates run 1%–3% higher. Rates above 9% are considered high — refinancing after 6–12 months of on-time payments can often reduce the rate by 2% or more, especially if your credit has improved.

How long should my auto loan term be?

The recommended term is 4–5 years (48–60 months). Longer terms (72–84 months) lower the monthly payment but significantly increase total interest and create negative equity risk — you may owe more than the car is worth for years. Shorter terms (3 years) minimize interest but raise monthly payments substantially.

How does a trade-in affect my auto loan?

A trade-in reduces the amount you need to finance, lowering both your monthly payment and total interest. In most states, sales tax is calculated on (vehicle price − trade-in value), so a trade-in also reduces the upfront tax cost. Getting multiple dealer quotes and checking private-sale value (often 10%–15% higher) can maximize your trade-in credit.

Is 0% APR financing a good deal?

0% APR deals are rare and typically reserved for new cars with excellent credit. They can save thousands in interest, but watch for shorter terms (often 36 months) that raise monthly payments, and forgo manufacturer cash rebates that may be worth more than the interest savings. Always compare both options with this calculator.

Does this calculator include sales tax, fees, and insurance?

The calculator includes sales tax (applied upfront on price minus trade-in, not financed). It does not include dealer documentation fees, registration, title, or auto insurance — these vary by state and dealer. Budget an additional $1,000–$2,000 for typical fees and $100–$300/month for full-coverage insurance, which lenders require.

Can I pay off my auto loan early?

Most auto loans allow early payoff without penalty, and doing so saves remaining interest. Check your loan agreement for prepayment clauses. Making biweekly payments or rounding up your monthly payment by $50–$100 can shave months off the term and save hundreds in interest without straining your budget.

Auto Loan Calculator

An auto loan calculator is a free online tool that estimates your monthly car payment. It factors in sales tax, trade-in value, and down payment to show your total loan cost. Free, no sign-up required.

Vehicle & Loan Details

Vehicle Price?Enter your vehicle price.

Down Payment?The amount you plan to pay upfront when purchasing the home.

Trade-In Value?Enter your trade-in value.

Interest Rate?The annual interest rate on your mortgage loan.

Loan Term?The length of your mortgage in years. Common terms are 15 or 30 years.

Sales Tax Rate

End of inputs

Your Auto Loan Summary

Monthly Payment

$434.59

5 years

Loan Amount

$22,000.00

Financed principal

Total Interest

$4,075.40

Over 60 months

Total Paid

$26,075.40

Principal + interest

Sales Tax

$1,890.00

Paid upfront

Total Car Cost

$40,965.40

Down + trade + tax + payments

Down payment + trade-in: $13,000.00 (37.14% of price). Loan-to-value: 62.86%. Interest share of total paid: 15.63%.

Principal vs. Interest Breakdown

Monthly Payment by Loan Term

Amortization Schedule

Month	Principal	Interest	Balance

60 months · Showing 0 rows

Key Insights

Your combined down payment and trade-in of $13,000.00 is 37.14% of the vehicle price — at least 20%, which keeps you above water throughout the loan and reduces interest cost.

Your trade-in of $8,000.00 covers 22.86% of the vehicle price — substantial, reducing your loan by $8,000.00 and saving roughly $1,380.00 in interest over the term.

Your rate of 6.90% is in the typical range for current auto-loan market conditions. Improving your credit score by 30+ points typically unlocks 0.5%–1% lower rates.

Your 5-year term is in the standard range for auto loans — balances monthly affordability against interest cost. Total interest of $4,075.40 over the life of the loan is typical.

Total interest of $4,075.40 is a moderate share of the vehicle price — typical for a 4–5 year loan at market rates. Use the amortization table to see how extra payments could reduce it further.

Guide

How to Use This Calculator

1Enter the vehicle price — the sticker price or negotiated out-the-door price of the car.
2Adjust the down payment slider. This is the cash you pay upfront, separate from any trade-in.
3Enter your trade-in value if you're selling an old car to the dealer as part of the deal.
4Set the annual interest rate (APR). Check your credit score first — it determines the rate lenders will offer.
5Choose the loan term. Common terms are 36, 48, 60, 72, and 84 months; shorter terms save interest.
6Adjust the sales tax rate for your state (range: 0% in Oregon to 9.5% in some California cities).
7Review the monthly payment, total cost, and amortization schedule in the result panel.
8Compare different loan terms side by side with the term-comparison chart to find the best balance.

Formula

How It's Calculated

The monthly payment for an auto loan uses the standard amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where:
- M = monthly payment (principal + interest)
- P = loan amount = vehiclePrice − downPayment − tradeIn
- r = monthly interest rate (annual APR ÷ 12)
- n = total number of payments (years × 12)

Sales tax is calculated separately on the taxable amount:
  salesTax = (vehiclePrice − tradeIn) × salesTaxRate

Sales tax is paid upfront (not financed) in most states.

For example, a $35,000 car with $5,000 down, $8,000 trade-in, 6.9% APR, 5-year term, 7% tax:
- P = 35,000 − 5,000 − 8,000 = $22,000
- r = 0.069 / 12 = 0.00575
- n = 60
- M = $433.32/mo
- Sales tax = (35,000 − 8,000) × 0.07 = $1,890 (paid upfront)
- Total interest = $4,399 over 5 years

Total cost of the car = down payment + trade-in + sales tax + total paid:
  5,000 + 8,000 + 1,890 + 25,999 = $40,889

Glossary

Key Terms

FAQ

Frequently Asked Questions

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