How this calculator works
Sales tax is charged on the price after your trade-in. The amount financed is the price minus your cash down and trade-in equity, plus tax and fees. The payment uses the standard loan formula, and the table shows the same loan at 36 to 84 months.
Worked example
With the example values below: Monthly payment, $553.65 (60 months at 7.50%). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Vehicle price | $35,000 |
| Cash down | $4,000 |
| Trade-in value | $6,000 |
| Owed on trade-in | $0 |
| Sales tax | 7% |
| Title & dealer fees | $600 |
| APR | 7.5% |
| Term | 60 months |
What goes into the amount you finance
Your loan isn't just the sticker price. Start with the negotiated price, subtract your trade-in value and cash down payment, then add sales tax, title and registration, and dealer fees. If you still owe money on your trade-in, that negative equity is often rolled into the new loan, which raises the payment and the interest.
Most states charge sales tax on the price after the trade-in credit, which is one reason trading in at the dealer can beat selling privately. The calculator follows that approach.
How loan term changes the cost
Longer terms lower the monthly payment but cost more interest, and lenders usually charge higher rates on longer loans. On $35,000 at 7%, a 48-month loan costs about $838 a month and $5,200 in interest; a 72-month loan costs about $597 a month and $8,000 in interest; an 84-month loan costs about $528 a month and $9,400 in interest.
Long terms also raise the risk of being upside down, owing more than the car is worth, because cars lose value fastest in the first few years. That matters if the car is totaled or you want to trade it in early.
Getting a better rate
- Get preapproved by a bank or credit union before visiting the dealer, then ask the dealer to beat it.
- Compare the APR and total cost, not just the monthly payment.
- Watch for manufacturer financing offers such as 0% or 1.9% APR on new cars, which sometimes replace cash rebates; compare both.
- Improve your credit score; the gap between top and bottom credit tiers can be 10 percentage points or more.
- Choose the shortest term whose payment fits your budget.
Budgeting for the whole cost
A common guideline is the 20/4/10 rule: put 20% down, finance for no more than four years, and keep total car costs, including insurance and fuel, under 10% of gross income. Few buyers meet all three today, but it's a useful check. The car affordability calculator works backwards from a payment you're comfortable with, and the car ownership cost calculator adds fuel, insurance and depreciation.
Frequently asked questions
How is a car loan payment calculated?
With the standard loan formula: payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount financed, r is the monthly rate (APR ÷ 12) and n is the number of months. $30,000 at 7% for 60 months is about $594 a month.
What is a good APR for a car loan?
It depends on your credit score, whether the car is new or used, and the term. Borrowers with excellent credit get the lowest rates, often several points below average; used-car loans and long terms cost more. Compare at least two preapprovals.
Is a 72-month car loan a bad idea?
Often. It lowers the payment but usually carries a higher rate, costs more total interest and makes it likely you'll owe more than the car is worth for several years. Choose 60 months or less if the payment fits.
How much should I put down on a car?
About 20% on a new car and 10% on a used car helps avoid owing more than the car is worth and lowers the rate and payment. Any down payment reduces the interest you'll pay.
Is car loan interest tax-deductible?
For 2025 through 2028, interest on a loan for a new, US-assembled personal vehicle can be deducted up to $10,000 a year, phasing out above $100,000 of income ($200,000 married filing jointly). Used cars, leases and business vehicles don't qualify for this deduction.
Grow what this calculator projects.
TruthSayer AI sends quantitative stock signals across valuations, earnings and dark-pool activity, each one traded in its own funded account first.
Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.