How this auto loan calculator works
Enter the negotiated vehicle price, your down payment, any trade-in value and your sales tax rate. The calculator works out the amount financed as price minus down payment and trade-in, plus sales tax on the price after the trade-in — the method most states use.
Add the APR from your financing offer, choose a term from two to seven years and set the first payment month. You'll see your monthly payment, total interest, the total of all payments and your payoff month, along with a balance chart and amortization schedule.
Turn on Compare to see a shorter term against a longer one, or add an extra monthly payment to see how fast you can own the car outright.
The loan payment formula
Fixed-rate installment loans use the standard amortization formula, which sets one payment that clears interest and principal exactly by the final month:
M = P × [ r(1 + r)^n ] / [ (1 + r)^n − 1 ]
- M = monthly payment
- P = amount financed
- r = monthly interest rate (APR ÷ 12)
- n = number of monthly payments (years × 12)
- Each month: interest = balance × r; principal = M − interest (+ any extra payment)
Worked example
Take a $35,000 car with $4,000 down, no trade-in and 6% sales tax. Tax adds $2,100, so you finance $33,100. At 7.5% APR for five years the payment is about $663, and you'd pay roughly $6,700 in interest.
Choose a four-year term instead and the payment rises to about $800, but interest drops to roughly $5,320. A six-year loan lowers the payment to about $572 while raising interest to around $8,110 — and you'd likely owe more than the car is worth for longer.
Negotiate the price, not the payment
Dealers often ask what monthly payment you want, then stretch the term to hit it. A lower payment over 72 or 84 months can hide a higher price or rate. Settle the out-the-door price first, then talk financing, and use this calculator to check every number the finance office gives you.
Why term length matters more on a car
Unlike a home, a car loses value quickly — often 15% to 25% in the first year. On a long loan with little down, your balance can exceed the car's value for years. Being "underwater" is a problem if the car is totaled or you need to sell, because you'd still owe the difference.
A common guideline is to put at least 10% to 20% down, finance for no more than four or five years, and keep total transportation costs — payment, insurance and fuel — to roughly 10% to 15% of take-home pay. GAP insurance can cover the shortfall if the car is lost while underwater, but a larger down payment is the cheaper fix.
Sales tax, trade-ins and fees
Most states charge sales tax only on the price after your trade-in credit, which is how this calculator handles it; a few tax the full price, so check your state's rules. Dealers also add documentation, title and registration fees that vary by state. If you roll those into the loan, add them to the vehicle price for a complete estimate.
If you still owe money on your trade-in, subtract that payoff amount from its value before entering it. Rolling negative equity into a new loan increases both the amount financed and the risk of being underwater.
Getting the best auto loan rate
Get preapproved by a bank or credit union before visiting the dealership. A preapproval gives you a benchmark; if the dealer's financing beats it, take the better offer. Manufacturer promotional rates, sometimes 0% to 3.9% on new cars, may require giving up a cash rebate — compare both options using total cost.
Used-car loans usually carry higher rates than new-car loans, and longer terms often cost more per year. Your credit score has the largest effect; even a modest improvement can lower your rate noticeably.
Paying the car off early
Most auto loans use simple interest, so extra principal payments reduce interest immediately. Ask the lender to apply extra money to principal, and confirm there's no prepayment penalty. Use the extra payment field to see how adding even $50 a month changes the payoff date.
Frequently asked questions
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Open calculatorNot financial advice. ClearCalc provides estimates for educational purposes only. Results depend on the assumptions you enter and may differ from offers from lenders or institutions. Consult a qualified professional before making financial decisions.